How to use the client profitability calculator
- Add a row for each client: the revenue you earned, the hours you spent on that client, and any direct costs such as software, contractors or travel that you paid for them.
- Enter what an hour of your time is worth to you. It sets the line between a client that pays you enough and one that does not. Use 0 if you only want pay per hour.
- Read the ranking. The best client is at the top, and the headline shows the best and lowest pay per hour. The stats list any client that pays less than your hourly value.
- Use Copy, Print or CSV to keep the table.
Formula
Pay per hour = (revenue - direct costs) / hours worked
Profit = revenue - direct costs - hours x your hourly value
Margin = profit / revenue
Share of revenue = client revenue / total revenue
Pay per hour tells you what you really earned for each hour. Profit asks whether that was more than your time is worth to you, so it can be negative even when the client paid.
Three clients and a 50 dollar hour
Client A paid $3,000 for 50 hours, which is $60 an hour. Client B paid $4,500 for 40 hours with $300 of direct costs, so it earned $4,200, which is $105 an hour. Client C paid $1,200 for 30 hours, which is $40 an hour.
Valuing your time at $50 an hour, profit is $500 for A, $2,200 for B and a loss of $300 for C. Together the three paid $8,700 for 120 hours, an average of $70 an hour. Client B is the best fit and Client C pays less than your time is worth, even though it is 13.8% of revenue.
Why the biggest client is not always the best
Revenue and effort do not move together. A large client can take far more hours in meetings, revisions and messages, so it ranks lower than a small client that pays well for a few focused hours. Ranking by pay per hour shows which clients repay your time, which is the scarce thing you sell.
Be honest about the hours. Count every email, call and revision, including unpaid ones. If you do not track hours, estimate with care: an optimistic estimate makes a difficult client look better than it is.
What to do with the ranking
A low rank is a prompt for a question, not a verdict. You might raise prices for the client, limit revisions, change what is included, or decide that the work builds skills or leads to other work. A high rank might tell you where to look for similar clients.
To set a rate in the first place, use the freelance rate calculator, and to price a single job, the project quote calculator. The billable utilization calculator shows how much of your working time earns money at all.
Assumptions and limits
- Revenue, hours and direct costs are the numbers you enter for the same period for every client.
- Your hourly value is a number you choose, shown as an example until you change it. It is not a market rate.
- Taxes, overhead such as rent, and unpaid time outside client work are not included.
- Hours must be above zero for every client, because pay per hour cannot be found otherwise.
Frequently asked questions
What counts as a direct cost?
Anything you paid because of that client, such as a contractor, stock photos, travel or a software license bought for the job. General costs like your rent or internet are overhead and are left out.
What does a negative profit mean?
The client paid less than your time is worth to you at the hourly value you entered. It does not mean the client lost you money out of pocket, unless direct costs exceeded revenue.
How do I choose my hourly value?
Many people use the hourly rate they want to earn, or what they would earn at a job. Try a few values and see which clients change sides of the line.
Can I compare clients over different periods?
The tool compares whatever you enter, so use the same period for every client, such as the last quarter. Mixing a month with a year would make the pay per hour hard to compare fairly.