Accountants Labour Cost (Hourly) Calculator
Estimate the full hourly employment cost and suggested charge-out rate for an accountant using salary, employer costs, productive hours, overheads and margin.
Overview
Use this Accountants Labour Cost (Hourly) Calculator to estimate the real cost of employing an accountant for each productive hour. Add the annual salary, employer on-costs, realistic productive hours, allocated overhead and your target profit markup to estimate a practical charge-out rate.
How it works
The calculator first adds employer on-costs to the annual salary to estimate total annual employment cost. It divides that amount by productive hours rather than all paid hours, because not every working hour can be billed or assigned to client work. It then adds allocated hourly overhead and applies the selected profit markup to show a suggested charge-out rate.
How to use this calculator
- 1Enter the accountant's gross annual salary.
- 2Add employer on-costs as a percentage of salary.
- 3Estimate the number of productive client-work hours available each year.
- 4Enter the business overhead allocated to each productive hour.
- 5Choose a target profit markup and review the suggested hourly rate.
Example Calculation
Annual accountant salary
$50,000
Employer on-costs
20%
Productive hours per year
1500
Hourly business overhead
$15
Target profit markup
25%
Suggested hourly charge-out rate
$68.75
A salary of 50,000 with 20% employer on-costs gives an annual employment cost of 60,000. Spread over 1,500 productive hours, the labour cost is 40.00 per hour. With 15.00 hourly overhead and a 25% markup, the suggested charge-out rate is 68.75 per hour.
Frequently asked questions
What are productive hours for an accountant?
Productive hours are the hours available for client work or directly chargeable work after allowing for leave, training, internal meetings, administration, business development and other non-billable activity.
Which costs should be included in employer on-costs?
Typical items include employer payroll taxes, pension or retirement contributions, insurance, paid benefits and other costs directly linked to employment. Use a percentage that reflects your own situation.
Why is the hourly labour cost higher than salary divided by working hours?
A salary covers all paid time, while only some hours may be productive or billable. Employer on-costs also increase the total cost beyond gross salary.
What should be included in hourly overhead?
You may include a reasonable share of office costs, software subscriptions, equipment, professional memberships, management, training, marketing and administrative support.
Is profit markup the same as profit margin?
No. This calculator uses markup, which is added to cost. For example, a 25% markup on a 55 hourly cost produces a 68.75 rate. Profit margin is measured as a percentage of the final selling price.
Should I use the suggested rate as my final client price?
Treat it as a cost-based starting point. Final pricing may also depend on service scope, client value, market conditions, fixed-fee work, capacity and the level of risk involved.
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Assumptions and warnings
Assumptions
- The annual salary is the employee's gross pay before employer-paid costs.
- Employer on-costs are estimated as a fixed percentage of salary.
- Productive hours exclude non-billable time such as leave, training, administration and internal meetings.
- Hourly overhead is assumed to be allocated consistently across productive hours.
- The suggested rate is an estimate and does not include sales taxes, discounts, write-offs or bad debts.
Warnings
- This calculator provides an estimate only and is not financial, accounting or pricing advice.
- Actual staff costs and charge-out rates can vary with contracts, utilisation, local employment rules and business circumstances.