A fixed-price project’s real value depends on the hours it took. Effective hourly rate — project fee divided by actual hours — reveals whether a flat quote actually beat your hourly rate.
The example
$3,680 fee, 52 actual hours.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | Fee | 3680 |
| 3 | Actual hours | 52 → $70.77/hr |
The formula
The formula:
How it works
How it works:
- Divide the fixed project fee by the hours you actually worked.
- Compare the result to your target hourly rate — below it means the flat price lost money per hour.
- It exposes scope creep: the more hours overrun, the lower the effective rate falls.
- Track it across jobs to learn which project types are truly profitable.
This is the number that catches bad fixed bids. A $3,680 quote feels fine until 52 hours drag the effective rate to $71/hr — below your $80 target. Logging actual hours and computing effective rate per project turns gut feel into data, and tells you which clients or work to reprice or decline next time.
Try it: interactive demo
Project fee and actual hours.
Variations
vs target rate
Win or lose:
Lost vs hourly
Dollars left on table:
Break-even hours
Max hours at target:
Pitfalls & errors
Track real hours. Effective rate is meaningless without honest time logs.
Scope creep shows here. Overruns silently erode the effective rate.
Zero hours. No logged hours gives #DIV/0!.
Practice workbook
Frequently asked questions
How do I calculate effective hourly rate in Excel?
How does this reveal scope creep?
How many hours can I spend before a flat fee underpays?
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