Accountants Break-Even Rate (Daily) Calculator FAQ
Answers to common questions about accountant daily break-even rates, billable days, costs, profit targets and results.
This FAQ explains the inputs and results used in an accountants' daily break-even rate calculation. The calculator is an educational business-planning tool and its results are estimates.
General questions
Core concepts behind daily break-even pricing for accountants.
What is an accountant's break-even daily rate?
It is the average amount that must be invoiced per billable day to recover the annual costs entered in the calculator, without an additional profit target.
What does a target daily rate mean?
It is the average daily revenue required to recover annual costs and achieve the chosen annual profit target.
Who can use this calculator?
It can be used by sole practitioners, freelance accountants, bookkeepers and accountancy practices planning a cost-based charge-out rate.
Is the result a final client quote?
No. It is a planning estimate. A final price can also depend on service scope, client needs, risk, payment terms and market conditions.
Costs and profit target
How to decide what belongs in the annual cost base.
What should be included in annual overheads?
Include recurring business operating costs such as rent, software, insurance, subscriptions, marketing and professional fees where relevant.
Should owner pay be included?
Include the annual pay the owner needs to draw, or a suitable employment-cost figure, if it needs to be funded by client revenue.
What are other annual costs?
They are costs not already included in overheads or salary, such as training, equipment, finance costs or a planned allowance for bad debts.
How should I set a profit target?
Use the additional annual profit amount the business aims to make after covering the costs entered. It is separate from any owner pay already included.
Billable time and rate calculation
How chargeable capacity changes the result.
How many billable days should I enter?
Use a realistic annual estimate after removing holidays, sickness, administration, proposals, marketing, training, internal work and other non-invoiced time.
Why does reducing billable days increase the required rate?
The same annual cost and profit requirement must be recovered across fewer invoiced days.
What are billable hours per day used for?
They are used only to calculate the equivalent hourly rate from the target daily rate.
Should I use a full working day for billable hours?
Use only the hours normally charged to clients. Time spent on administration or business development is usually not billable.
Accuracy and tax
Important boundaries of a cost-based planning estimate.
Does the calculator include VAT?
No. VAT is not separately included. It is commonly excluded from revenue planning because it is generally collected for the tax authority, but treatment can vary.
Does the calculator include corporation tax or personal tax?
No. These taxes are not separately modelled unless you include an amount within your cost or profit assumptions.
Should I allow for late payment and bad debts?
The calculation does not automatically do so. You can consider whether an appropriate allowance belongs in other annual costs for your own planning.
How often should I update the calculation?
Review it when costs, staffing, billable capacity, service mix or the desired profit target changes materially.
What is an accountant's break-even daily rate?
It is the average amount that must be invoiced per billable day to recover the annual costs entered in the calculator, without an additional profit target.
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