Bill Rate Calculator

Formula

The formula to calculate the Bill Rate (BR) is:

\[ BR = \frac{S}{C} \times M \]

Where:

$ BR $ is the Bill Rate ($/hr)
$ S $ is the Employee Salary ($/yr)
$ C $ is the Employee Capacity in terms of Billable Hours per Year (hrs/yr)
$ M $ is the Multiplier to account for overhead and profitability

What is a Bill Rate?

A bill rate is the hourly rate that a company charges a customer for services rendered by an employee. The bill rate is calculated to cover not only the employee's salary but also overhead costs, and to achieve a certain level of profitability. It is a key factor in pricing strategies and helps companies ensure they are covering all costs while making a profit.

Example Calculation

Let's consider an example:

Employee Salary (S): $100,000 per year
Employee Capacity (C): 2080 billable hours per year
Multiplier (M): 4

Using the formula to calculate the Bill Rate (BR):

\[ BR = \frac{100000}{2080} \times 4 = \frac{100000}{2080} \times 4 = 48.08 \times 4 = 192.31 \, \text{\$/hr} \]

This means the company should charge $192.31 per hour for the employee’s services to meet its profitability goals.