Accountants Break-Even Rate (Daily) Calculator
Estimate the minimum daily rate an accountant needs to charge to cover annual costs, salary and planned profit across expected billable days.
Overview
Use this daily break-even rate calculator to estimate what an accountant or accountancy practice needs to charge per billable day. Enter annual overheads, salary costs, other costs, realistic billable days and an optional profit target to see the minimum sustainable rate.
How it works
The calculator adds annual overheads, salary costs and other annual costs to find the total amount the business must recover. It divides that figure by expected billable days to calculate the break-even daily rate. It then adds your target annual profit and divides the new revenue requirement by billable days to show a daily rate that supports that target. The hourly equivalent is calculated from your selected billable hours per day.
How to use this calculator
- 1Enter your estimated annual business overheads.
- 2Add your annual salary or owner cost.
- 3Include any other annual costs you expect to incur.
- 4Estimate the number of days you can realistically bill to clients.
- 5Enter the annual profit you would like the business to make.
- 6Review the break-even daily rate and the rate that includes your profit target.
Example Calculation
Annual business overheads
$30,000
Annual salary and owner cost
$70,000
Other annual costs
$10,000
Expected billable days per year
180
Target annual profit
$20,000
Billable hours per day
7.5
Break-even daily rate
$611.11
With annual costs of 110,000 and 180 billable days, the break-even rate is about 611.11 per day. Including a 20,000 annual profit target increases the required rate to about 722.22 per day, or 96.30 per billable hour.
Frequently asked questions
What is a break-even daily rate for an accountant?
It is the minimum amount that needs to be charged for each billable day to recover annual business costs, with no profit left over.
How many billable days should an accountant use?
Use a realistic estimate after deducting holidays, sickness, administration, business development, training, internal work and other non-chargeable time from working days.
Should salary be included in the break-even calculation?
Usually, yes. Include the pay you need to draw or the total employment cost of the person whose time is being sold, so the rate reflects the cost of running the work.
Does the calculator include VAT?
No. VAT is normally collected on behalf of the tax authority rather than being business income, so it is usually excluded from pricing calculations.
Why is my target daily rate higher than my break-even rate?
The target rate includes the additional revenue needed to achieve your chosen annual profit, while the break-even rate only covers estimated costs.
Should I use the result as my final client price?
Use it as a starting point. Your final price may also depend on the scope and value of the work, client risk, payment terms, market conditions and taxes.
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Assumptions and warnings
Assumptions
- All annual costs entered are expected to be paid during the year.
- The billable-day estimate reflects the time that can actually be invoiced to clients.
- The calculation spreads annual costs evenly across expected billable days.
- The profit target is treated as an amount required after the costs entered in this calculator.
- Results are planning estimates and do not include VAT, corporation tax or personal tax unless you include them in your cost figures.
Warnings
- This calculator provides a business-planning estimate only and is not financial, tax or accounting advice.
- Actual rates may need to be higher to allow for payment delays, bad debts, changes in workload, taxes and pricing conditions.