Real hourly rate = money received ÷ every hour you spent, including calls, emails, revisions, and admin. Most freelancers and agencies find their real rate is 40 to 60% of their quoted rate. Knowing the number is the first step to fixing it.
The two rates
There is the rate on your proposal. Say $100 an hour, or a $5,000 project you think will take 50 hours.
Then there is the rate you actually earned. That is the money divided by all the time, not just the "work" time. The kickoff call. The three rounds of changes. The forty emails. The invoice you had to chase.
The first rate is what you charge. The second is what you make. They are rarely the same number.
The formula
Real hourly rate = money received ÷ total hours
Simple. The hard part is being honest about "total hours."
What to count
Everything you did because of this client or project.
- Delivery work. The thing you were hired to make.
- Calls and meetings, including the ones that "did not count."
- Revisions. Every round after the first.
- Email, messages, and chasing approvals or payment.
- Admin: proposal writing, contract, invoicing, reporting.
- Research and prep you did not bill.
- Travel, if any.
If you did it and would not have done it without this client, it counts.
A worked example
A $5,000 fixed-fee project. You estimated 50 hours. That is $100 an hour, which is your target.
| Hours | |
|---|---|
| Proposal and contract | 4 |
| Kickoff and check-in calls | 6 |
| Delivery work | 50 |
| Revisions (rounds 2 and 3) | 14 |
| Email and chasing approvals | 9 |
| Invoicing and chasing payment | 2 |
| Total | 85 |
$5,000 ÷ 85 = $59 an hour. Not $100. The project felt fine. It paid 59% of what you thought.
Put your own numbers into the effective hourly rate calculator. It shows the rate and the hours by category.
Common mistakes that make the number look better
- Counting only delivery hours. This is the big one. It is why the project "felt fine."
- Rounding calls down. A 30-minute call is an hour once you count prep and the notes after.
- Forgetting the proposal. You spent four hours winning the work. That is part of the work.
- Mixing billed and received. If the client has not paid, you have not earned it yet. Pick one basis and keep it.
- Confusing rate with profit. This is revenue per hour. Costs like software, tax, and rent come out after.
What to do with the number
If your real rate is close to your target, good. Keep tracking so it stays that way.
If it is well below, look at the categories. Usually one bucket is the problem.
- Revisions too high: tighten the brief and cap the rounds. How.
- Calls too high: switch to written updates and keep calls for decisions.
- Email too high: batch it, and use a client portal for approvals instead of threads.
- Everything is high: the price is wrong for this client. When to raise a retainer.
Track it going forward
Do the math once and you learn about last quarter. Track it as you go and you learn in time to fix it. That means logging the calls, the revisions, and the emails against the project, not just the delivery work.
Where M-Tracker fits
In M-Tracker, every piece of work for a client is a task in that client's project, and the timer records the time, including calls, revisions, and admin if you make them tasks. The project shows all the hours and what the client paid, so the real rate is visible while the project is running. Finished work is checked against its brief before it reaches the client, which keeps revision rounds down, which keeps the rate up.
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