Your CODB rate is the hourly figure that keeps the lights on — annual expenses plus your target salary, divided by actually-billable hours. Bill below it and the business loses money no matter how busy you are.
The example
$30k costs, $50k salary, 1,000 billable hrs.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | 80,000 / 1,000 | — |
| 3 | CODB rate | → $80/hr |
The formula
The formula:
How it works
How it works:
- Total annual business costs — gear, software, insurance, marketing, studio.
- Add your target salary — what you need to pay yourself.
- Divide by billable hours — only the hours clients actually pay for, not all worked.
- The result is the floor rate; profit margin is added on top.
Billable hours are the trap. A 2,000-hour work year is maybe 1,000 billable hours once you subtract editing, marketing, admin, and dead time. Dividing by 2,000 instead of 1,000 halves your rate and quietly bankrupts you. Be honest about how few hours actually get billed — that small denominator is exactly why creative work costs what it does.
Try it: interactive demo
Annual costs, salary, billable hours.
Variations
Add profit margin
Rate above floor:
Day rate
From hourly:
Sessions to break even
Cover costs:
Pitfalls & errors
Billable, not worked. Use only client-paid hours in the denominator.
Pay yourself. Include a real salary, not just costs.
Zero hours. No billable hours gives #DIV/0!.
Practice workbook
Frequently asked questions
How do I calculate my CODB hourly rate in Excel?
Why use billable hours, not total hours?
How do I add profit on top?
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