Accountants Break-Even Rate (Monthly) Calculator FAQ
Answers to common questions about monthly accounting practice break-even rates, billable utilisation, revenue targets and pricing results.
This FAQ explains the inputs and results used in a monthly accounting practice break-even rate calculation. The calculator is a planning tool and its results should be reviewed against current costs, capacity and actual collections.
General break-even rate questions
Core questions about what the calculator estimates and how it can be used.
What does the Accountants Break-Even Rate (Monthly) Calculator calculate?
It estimates the average hourly amount a practice needs to invoice each month to cover entered overheads, planned owner pay and a target profit.
Is the result a minimum price for every client?
No. It is an average practice-wide benchmark. Individual service fees can be above or below it, provided the expected mix of work supports the overall revenue target.
What is required monthly revenue?
It is the sum of monthly overheads, owner pay and target profit entered in the calculator.
Who can use this calculator?
It can be used by accounting practices, bookkeeping businesses and similar professional service firms that want an hourly revenue planning benchmark.
Hours and utilisation
Questions about converting available time into realistic invoiceable capacity.
What are available work hours?
They are the total hours available for client work during the month before reducing them for non-billable time.
What does billable utilisation mean?
It is the percentage of available hours expected to be invoiced to clients.
How do I calculate billable utilisation from past records?
Divide invoiced hours by available work hours for a comparable period, then multiply by 100.
Should meetings and administration be included in billable hours?
Include them only when they are normally invoiced to clients. Otherwise, allow for them through a lower billable utilisation percentage.
What happens if actual billable hours are lower than estimated?
The effective hourly revenue needed to meet the same monthly target becomes higher because fewer hours are available to recover it.
Costs, owner pay and profit
Questions about the monthly revenue items included in the calculation.
What should be included in monthly overheads?
Include recurring operating costs you want the practice to recover, such as rent, software, insurance, marketing, administration and other regular business expenses.
Should I include owner pay separately?
Yes, if you want the calculation to show the revenue required to support planned owner pay. Avoid including the same amount in both overheads and owner pay.
What is target profit in this calculator?
It is the monthly amount the practice intends to retain after overheads and planned owner pay are covered.
What is the target profit margin output?
It shows target profit as a percentage of required monthly revenue.
Does the calculator include taxes automatically?
No. It does not automatically include income tax, sales tax, VAT, financing costs or other taxes and charges.
Using the results
Questions about interpreting and applying the calculator outputs.
What is the cost-only hourly rate?
It is the hourly rate needed to cover overheads and owner pay before adding the target profit.
Can I use the result for fixed-fee packages?
Yes. Use it as a time-value benchmark when estimating the fee needed for the expected work hours of a package.
Why might my actual results differ from the estimate?
Actual results can differ because of discounts, write-offs, collection delays, changing costs, scope creep and differences between expected and actual billable time.
How often should I update the calculation?
Update it when recurring costs, owner pay, capacity, service mix, utilisation expectations or profit goals change.
What is a break-even hourly rate for an accountant?
It is the average amount the practice needs to invoice per billable hour to cover monthly costs and planned earnings. This calculator also includes a chosen profit target.
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