What did that project really pay?
The rate you quoted and the rate you earned are different numbers. The gap is admin, revisions and the scope that crept in for free.
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Everything the client was invoiced, including any approved change orders.
The hours that made it onto an invoice or into the fixed-price estimate.
Scoping calls, revisions, admin, chasing payment. Be honest — this is where the money goes.
Subcontractors, stock assets, licences, travel — anything the fee had to pay for first.
Your headline rate, or the number you had in mind when you quoted.
What the job actually paid
$73/hr
$22/hr below the rate you were aiming for.
Where the gap came from
Those 22 unbilled hours would have invoiced at $2,200. That is not a rounding error — it is the difference between this job and the one you thought you sold.
The rate you quoted and the rate you earned
You quoted $8,000 for eighty hours of work. That is $100 an hour, and $100 an hour is a good rate. Then the project happened. There was a scoping call before the contract, two rounds of revisions rather than the one you allowed for, a fortnight of email about a change nobody wanted to pay for, and four separate attempts to get the invoice settled. Somewhere in there you also bought $600 of stock assets the client never reimbursed.
Twenty-two hours that nobody paid for, and six hundred dollars that never reached you. The rate was never $100 — it was $73, and it was $73 the entire time. You just had no way of seeing it. Those are the numbers loaded into the calculator above.
Why it stays invisible
Nothing in ordinary bookkeeping surfaces this. Your accounts show $8,000 of revenue against a project that felt busy, which reads as a success. Profit and loss operates on money, and the loss here is denominated in hours. Unless you deliberately divide one by the other, an underpriced project looks identical to a well-priced one right up until you notice you are exhausted and not much better off.
It also compounds. The next quote for similar work gets priced from the headline rate — the number you remember — so the same error is copied forward into every project of that shape you ever sell.
What the calculator is doing
| Figure | How it is derived |
|---|---|
| Headline rate | Fee ÷ billed hours. The rate the quote implied. |
| Effective rate | (Fee − direct costs) ÷ every hour the job consumed. The rate you earned. |
| Lost per hour | The gap between them. Multiply by total hours for what the job cost you against its own quote. |
| Unbilled value | Unbilled hours at the headline rate — what that work was worth had anyone paid for it. |
Direct costs are subtracted before the division because money that passed through you to a subcontractor or a licence was never income. Counting it inflates the rate on exactly the projects where you were functioning as an agency for free.
Be generous with the unbilled column
The instinct is to record only substantial blocks of work, which is how the number stays comfortable and useless. The twenty minutes on the phone, the small favour, the “quick change” that took an afternoon — those are the hours that move the rate, precisely because each one felt too small to mention. If you are unsure whether something counts, it counts.
Turning one number into a habit
Running this once is instructive. Running it on every project is what changes how you price — the pattern is what tells you which kind of client, which kind of work and which kind of contract quietly costs you money. That requires tracked time and recorded costs per project, which is more discipline than a calculator can supply.
If you know what you should be charging in the first place, the rate calculator works backwards from the take-home pay you want.
Common questions
- What is an effective hourly rate?
- What a project paid you per hour of your life, rather than per hour you invoiced. Take the fee, subtract costs you absorbed, and divide by every hour the job consumed — including the scoping call, the three rounds of revisions and the fortnight spent chasing payment. It is almost always lower than the rate you quoted, and the difference is where freelance businesses quietly fail.
- Which hours count as unbilled?
- Any hour the project caused that a client did not pay for. Scoping and proposals, kickoff calls, revisions beyond what was quoted, project management, invoicing and chasing payment, and the work absorbed when scope crept without a change order. If the job would not have existed and neither would the hour, it counts.
- Is a fixed-price project better or worse than hourly?
- Fixed price is better when you estimate well and worse when you do not, and the risk is entirely yours. Under an hourly arrangement extra hours are extra income; under a fixed price they come straight out of your effective rate. That is not an argument against fixed pricing — it is an argument for measuring the outcome afterwards, which is what this calculator is for.
- What is a reasonable amount of unbilled time?
- Ten to fifteen percent is normal overhead on a well-run project. Above twenty percent something specific is wrong: the scope was vague, the revision rounds were uncapped, or change requests are being absorbed rather than charged. Twenty percent unbilled time is a twenty percent pay cut, and it does not show up anywhere in your accounts.
- What should I do when the effective rate is too low?
- Three things, in order of effectiveness. Cap revision rounds in the contract so extra ones are billable. Write change orders for scope changes rather than absorbing them — an amendment the client signs is a legitimate thing to ask for, not an act of aggression. And price the next project of this type from the effective rate you actually achieved, not the headline rate you hoped for.
This is one number. Runway tracks all of them.
Runway computes this per job from tracked time, expenses and subcontractor costs — no spreadsheet, and no forgetting the hours you never logged.
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