Accountants Overhead Cost (Hourly) Calculator
Estimate your accounting firm's overhead cost per billable hour from annual operating costs and expected billable hours.
Overview
This accountants overhead cost calculator estimates the operating cost your practice must recover from each billable hour. Enter key annual overhead categories and your realistic annual billable hours to create a useful baseline for pricing and capacity planning.
How it works
The calculator adds the annual overhead categories to find total annual overhead. It then divides that amount by expected annual billable hours. The result is the overhead portion of each billable hour; it is not a client charge-out rate. A sustainable charge-out rate will normally also need to account for direct delivery costs, desired profit and any applicable taxes.
How to use this calculator
- 1Enter your annual office-related costs.
- 2Add annual software, technology and administration costs.
- 3Include professional costs and any other recurring overheads.
- 4Estimate the total billable hours your firm expects to invoice in a year.
- 5Enter the number of fee-earning accountants and review the hourly overhead figure.
Example Calculation
Annual office costs
$24,000
Annual software and technology costs
$12,000
Annual administration costs
$35,000
Annual professional costs
$9,000
Other annual overheads
$10,000
Expected annual billable hours
3600
Number of accountants
5
Overhead cost per billable hour
$25.00
With annual overhead of 90,000 and 3,600 expected billable hours, the practice needs to recover 25.00 in overhead per billable hour. This is 18,000 of annual overhead per accountant across five accountants.
Frequently asked questions
What is overhead cost per billable hour?
It is the share of your firm's operating overhead allocated to each hour that can be invoiced to a client. It helps show the minimum overhead recovery needed in your pricing.
What costs should an accounting firm include as overhead?
Typical items include premises, utilities, software, IT support, non-billable administration, insurance, training, professional fees, marketing and office supplies.
Should accountant salaries be included in overhead?
Non-billable staff salaries and related employment costs are commonly treated as overhead. Fee-earner pay may be treated as a direct cost or included separately, depending on your pricing method.
Why should I use billable hours rather than total working hours?
Not all working time is available to invoice. Holidays, training, internal meetings, business development and administration reduce the hours that can recover overhead.
Is hourly overhead the same as my charge-out rate?
No. Hourly overhead only covers allocated operating costs. Your charge-out rate may also need to cover direct labour, client-specific costs, profit and taxes where applicable.
How often should a practice review its overhead rate?
Review it at least annually and whenever costs, staffing levels, utilisation or expected billable hours change materially.
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Assumptions and warnings
Assumptions
- All entered costs are annual operating overheads and are expressed in the same currency.
- Billable hours are the hours expected to be invoiced to clients, not total working hours.
- The hourly figure allocates overhead evenly across all expected billable hours.
- This calculation excludes direct client costs, partner drawings, profit margin, taxes and financing costs unless you include them in other overheads.
Warnings
- This calculator provides an estimate only and is not financial or accounting advice.
- Actual overhead recovery may vary as billable hours, staff capacity and costs change during the year.