The usual calculator stops at a rate. This one goes one line further: it asks how many hours a week you spend quoting, chasing and retyping, and shows what your rate — or your profit — would be if half of them were billable. Most owners discover the problem is not the rate. It is the hours.
A charge-out rate is not a number you pick. It is the revenue the business has to earn divided by the hours it can actually send an invoice for — and for most trades that second number is far smaller than the hours worked, because quoting, travel, chasing and admin are not on anybody's invoice. Work it out honestly and you get your rate. Then look at the admin line, because that is where the rate is actually being decided.
Three steps. First, what the business must earn: your target take-home plus every overhead — the van, insurance, tools, software, phone, accountant — and then a profit margin on top, because a business that only pays its owner is a job with extra paperwork. Second, the hours you can invoice: not the hours you work, but the share of them that end up on a bill. For a trade that is often 50–65%, and it is worth measuring from a real month rather than guessing, because everyone guesses high. Third, divide. That is the hourly rate; times eight is the day rate.
Most calculators stop there. The trouble is that the rate is now quietly paying for every hour you did not invoice, so a business with a lot of admin ends up with a high rate and thin margins at the same time, and the owner concludes the market will not bear what they need to charge. The rate is not the problem. The denominator is.
Take the hours a week you spend quoting, chasing quotes, retyping a paid quote as an order, booking couriers by hand, writing customer updates. At ten a week across 46 weeks that is 460 hours a year, and at your rate those hours are worth £26,800 of billing that never happened. They are not free; they are being paid for by every hour you do invoice, which is why the rate has to be what it is.
Now give half of them back. In the wholesale nursery quoting went from fifteen minutes to two or three and a paid quote populated the order flow by itself — around 675 hours a year of selling time returned with no bespoke software. In the fencing business the one-to-two hours of drawing per job went to zero. Those hours either come back as billable work at today's rate, or they let the same revenue be earned at a lower one. Either way the arithmetic moves by more than any price increase the market would tolerate.
A £45,000 target take-home and £18,000 of overheads, with 15% profit on top: £72,450 the business must earn. Forty-six weeks of 45 hours with 60% invoiced: 1,242 billable hours. So £58.33 an hour, £467 a day. Ten admin hours a week is 460 a year — £26,800 of billing at that rate that never happened. Recover half, 230 hours, and the rate needed falls to £49.22; or keep the rate and the business makes another £13,417.
Measure the billable share from a real month before you trust it, then measure the admin hours the same way — they are always more than remembered. If admin is over eight hours a week, those are the cheapest hours in the business to recover, and the operations audit exists to find them with evidence inside your working week. The other calculators cover the hire, the cost of standing still and the margin leak, and the short version of the method is on the byHoratio homepage.
The revenue your business must earn divided by the hours you can invoice. Add your target take-home to your annual overheads, uplift by the profit the business should make, then divide by working weeks times hours a week times the share of those hours you actually bill. At £45,000 take-home, £18,000 overheads, 15 per cent profit and 1,242 billable hours, that is about £58 an hour or £467 a day. Your figures will differ; the method does not.
For most trades and small contractors, 50–65 per cent of hours worked. The rest is quoting, travel, chasing, ordering and admin. Owners nearly always guess higher than they measure, so track one real month. Every point below your guess is a point on the rate you have been under-charging.
Because they are inside the rate whether you count them or not. Every hour you do not invoice is paid for by the hours you do, so a business with a lot of admin ends up with a high rate and thin margins at once. Ten admin hours a week is 460 a year; recovering half of them moves the arithmetic more than any price rise the market would accept.
Same revenue either way — that is the point of showing both. The choice is commercial: hold the rate and keep the extra profit, or lower it and win more work at the same margin. What the calculator makes clear is that the option exists at all, which it does not while the admin hours are stuck.
Add each person's loaded cost — salary plus employer contributions, pension, holiday cover and your management time — to the overheads, and add their billable hours to the denominator. The true cost of an employee calculator gives the loaded figure. A charge-out rate for a team is the whole team's required revenue divided by the whole team's billable hours.
Ten unpaid admin hours a week are the cheapest hours in your business to recover. The audit finds them with evidence. Twenty minutes, no deck, no pitch.
HORATIO@BYHORATIO.COM