How to calculate your effective hourly rate on a fixed-price quote
A fixed-price quote can look good until the hours you do not invoice separately are included. Your effective hourly rate is the amount left for your work divided by every hour the project is expected to consume.
1. Count every project hour
Add delivery work, administration, and revisions. Administration includes calls, project management, proposals, invoicing, and handoff. If you expect to spend time on it, include it in the estimate.
total hours = delivery hours + admin hours + revision hours
2. Count direct costs
List costs that belong to this project, such as subcontractor work, project-specific tools, and materials. Keep the currency and assumptions consistent with the quote.
direct costs = overhead + subcontractor cost
3. Calculate the effective hourly rate
Subtract direct costs from the quoted price, then divide by total hours. This is an arithmetic view of the supplied assumptions, not a promise that the project will be profitable.
effective hourly rate = (quoted price - direct costs) / total hours
4. Compare with your target rate
To estimate the price needed for your supplied target rate, multiply total hours by that rate and add direct costs.
target price = (total hours × target hourly rate) + direct costs
On the calculator example — $2,400 quoted, 35 hours, $480 of direct costs, $75 target — the leftover rate is $54.86/hour and the price that would hold $75/hour is $3,105. That is arithmetic on the supplied figures, not advice to raise the quote.
Use the free Quote Margin Check calculator to change the assumptions and review overrun scenarios before sending the quote. Your own scope, cost, and rate decisions remain yours.