Which clients actually make me money?. The Client Profitability Calculator takes annual revenue from the client, hours spent on the client per year, fully loaded cost per hour, direct expenses and returns annual profit on the client plus margin, profit per hour. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
For freelancers and agencies the scarce resource is billable time. Pricing has to cover unpaid hours, tools, taxes and time off, not just the hours a client sees on an invoice. Use the worked example below to check the maths against your own figures.
How the Client Profitability Calculator works
Rank clients by profit per hour, not by revenue. The biggest account is often the least profitable once the hours it demands are counted.
Worked example
With the example values (annual revenue from the client of $60,000, hours spent on the client per year of 500 hours, fully loaded cost per hour of $50, direct expenses of $2,000), the annual profit on the client is $33,000.00; margin 55%, profit per hour $66.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is annual profit on the client calculated?
profit = revenue − hours × cost per hour − expenses.
Which figures do I need?
Annual revenue from the client, hours spent on the client per year, fully loaded cost per hour, direct expenses. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
How do I choose the target income or margin?
Start from what you need to earn after tax and expenses, add a margin for unpaid time (sales, admin, holidays, slow months) and check the resulting rate against what your market pays.
