Methodology
How the calculation works
Original gross hourly rate = fixed fee ÷ planned hours
Absorb: new gross hourly rate = fixed fee ÷ (planned hours + extra hours)
Charge: additional proposed fee = extra hours × extra-work hourly charge + extra expenses
Charge: revised billed amount = fixed fee + additional proposed fee
Charge: revised gross hourly rate = revised billed amount ÷ total hours
What each input means
- Fixed quoted fee (USD)
- The full project amount before the expenses entered below.
- Planned project hours (hours)
- Include planning, communication, development and testing time.
- Extra unbilled hours (hours)
- Additional time beyond the original estimate.
- Extra out-of-pocket expenses (USD)
- Out-of-pocket costs for this project; enter 0 when none apply.
- Proposed extra-work hourly charge (USD / hour)
- The rate you propose charging your client, not your internal labor cost.
A worked example
A USD 1,500 project was planned for 20 hours. Another 10 unbilled hours lower its gross rate from USD 75.00 to USD 50.00/hour. At a proposed extra-work rate of USD 75 with no extra expenses, charging adds USD 750 and restores the gross rate to USD 75.00/hour.
How to use the result
The absorb scenario keeps the invoice unchanged. The charge scenario assumes a client-approved change. Discuss the added deliverable, cost and schedule impact before doing it. Extra expenses are cash outlays, not the value of your time.
Assumptions & edge cases
- Both gross rates exclude expenses, payment fees and taxes.
- If planned hours are zero, the original rate is N/A. Total hours of zero also makes revised hourly rates N/A.
- Leave the extra-work rate blank to omit the charging scenario. A rate of zero is different: it charges expenses only.
All monetary values are in USD. No currency conversion is performed. Inputs must be non-negative, finite numbers of at most 1,000,000,000; intermediate values are not rounded, and displayed amounts use two decimal places. Very small nonzero values below 0.000001 are not supported.