How to Calculate Billing Rates

How to Calculate Billing Rates
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Often people will receive a bill without a billing rate. To determine the billing rate, you need to divide the bill by the number of hours worked. This allows you to see how much a person billed you for his work. The billing rate is good to know for future circumstances so you can find a person who charges a reasonable billing rate.

Determine the total cost for the services. This number will be on the company's bill. For example, a law firm charges Person A $10,000 for work on a divorce case.

Determine how much time the person providing services put in to your business. Lawyers will disclose the amount of billable hours to a client. For services that do not disclose billable hours, make a general rough estimate of hours worked, like it normally takes two hours to clean a house. In our example, the lawyer had 10 billable hours on the divorce case.

 

Divide the cost for the service by the hours worked on the services to determine the billing rate. In our example, $10,000 divided by 10 hours of work equals a billing rate of $1,000 an hour.