Accountants Break-Even Rate (Monthly) Calculator
Calculate the minimum hourly rate an accounting practice needs each month to cover costs, owner pay and a target profit.
Overview
Use this Accountants Break-Even Rate (Monthly) Calculator to estimate the average hourly fee your practice needs to charge. Enter monthly overheads, planned owner pay, a profit target, available hours and expected billable utilisation to set a practical revenue and pricing target.
How it works
The calculator adds monthly overheads, planned owner pay and target profit to find the revenue required for the month. It then estimates billable hours by multiplying available work hours by billable utilisation. Dividing required revenue by those billable hours gives the average hourly break-even rate. The cost-only rate shows the same calculation without the target profit.
How to use this calculator
- 1Enter your recurring monthly business overheads.
- 2Add the monthly owner pay you want the practice to support.
- 3Set the monthly profit you want to retain.
- 4Enter available work hours and your expected billable utilisation.
- 5Review the hourly rate and monthly revenue target, then compare them with your current fees.
Example Calculation
Monthly business overheads
$3,500
Monthly owner pay
$5,000
Monthly target profit
$1,500
Available work hours per month
140
Billable utilisation
70%
Break-even hourly rate
$102.04
With required monthly revenue of 10,000 and 98 billable hours, the practice needs an average hourly rate of about 102.04 to cover costs, owner pay and the profit target.
Frequently asked questions
What is a break-even hourly rate for an accountant?
It is the average amount you need to invoice for each billable hour to cover monthly costs and planned earnings. In this calculator, it also includes your chosen profit target.
How do I estimate billable utilisation?
Divide expected invoiced hours by total available work hours, then multiply by 100. Allow for administration, marketing, professional development, meetings, leave and unbilled client time.
Should owner pay be included as an overhead?
You can include it in overheads, but do not enter it twice. This calculator separates owner pay so you can see the amount required to support it clearly.
Does the result include tax?
No. The calculation uses the amounts you enter and does not automatically add income tax, VAT, sales tax or other taxes. Include relevant costs in your planning figures where appropriate.
Why is my required hourly rate higher than my salary-based rate?
A practice rate must fund non-billable time, operating costs, owner pay, profit and the risk of unpaid or delayed work. A salary alone does not reflect all of these costs.
Can I use this calculator for fixed-fee accounting services?
Yes. Use the hourly result as a benchmark, then estimate the hours required for each fixed-fee service. Your proposed fee should cover the expected time at or above the required average rate.
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Assumptions and warnings
Assumptions
- All entered amounts are monthly and use the same currency.
- Billable utilisation reflects the share of available work time that can be invoiced to clients.
- The hourly rate is an average across all client work and service lines.
- The calculation excludes taxes, bad debts, financing costs and one-off expenses unless you include them in overheads.
- Results are planning estimates and should be reviewed as costs, capacity and pricing change.
Warnings
- This calculator provides a business planning estimate only and is not accounting, tax or financial advice.
- Actual results can differ because of collection delays, write-offs, scope changes and unplanned costs.