Accountants Profit Target (Daily) Calculator FAQ
Answers to common questions about daily fee-income targets, billable capacity, overheads and realised rates for accounting practices.
Use these answers to understand the inputs, outputs and assumptions behind the Accountants Profit Target (Daily) Calculator. The calculator is intended for general business planning estimates.
General questions
What the calculator estimates and who can use it.
What does this calculator estimate?
It estimates annual revenue, daily fee income, daily profit contribution and an average realised hourly rate needed to meet a chosen annual profit target.
Who can use an accountants profit target calculator?
It can be used by sole practitioners, partners and accounting practice managers who want to model revenue requirements.
Is the daily fee-income target the same as profit?
No. Daily fee income is revenue. The daily profit target is the profit goal divided by billable days; revenue must also cover fixed and variable costs.
Can it be used for a new practice?
Yes, as a scenario-planning tool. New firms may need to use cautious assumptions for billable days, client acquisition and costs.
Inputs and cost categories
How to choose figures for the main calculation inputs.
What belongs in fixed overheads?
Typical items include salaries, rent, software, insurance, professional fees, marketing, training and administration costs that are not directly tied to each sale.
What are variable costs for an accounting practice?
They can include subcontractor payments, referral commissions, payment fees and delivery costs that generally increase with revenue.
How many billable days should I enter?
Start with working days, then remove leave, public holidays, training, internal meetings, administration and business-development time. Use a realistic productive-day estimate.
What are billable hours per day?
They are hours expected to be charged to clients on an average billable day, rather than total hours spent at work.
Formula and results
How the calculator produces its outputs.
How is annual revenue target calculated?
It adds the annual profit target to fixed overheads, then divides that amount by the contribution margin after variable costs.
What is contribution margin in this calculation?
It is one minus the variable cost percentage expressed as a decimal. For example, 20% variable costs leave an 80% contribution margin.
Why is the required hourly rate useful?
It provides a capacity check by showing the average revenue needed for each billed hour to support the plan.
Why might the required realised rate differ from the advertised rate?
The realised rate can be affected by fixed-fee work, discounts, write-offs, non-recoverable time and changes in the service mix.
Accuracy and planning use
How to use estimates carefully.
How accurate is the calculator?
Accuracy depends on the quality of the inputs. It is a planning estimate and cannot predict client demand, costs or collections.
Does the calculator include tax?
No. Tax is excluded unless it has been reflected in the figures entered, such as by setting an after-cost profit target.
Does it include debt repayments or financing costs?
Not automatically. Include relevant recurring financing costs in overheads only if that matches the planning purpose.
How often should targets be reviewed?
Review them when staffing, prices, service mix, cost levels or realistic billable capacity changes.
What is a daily profit target for an accounting firm?
It is the annual profit target divided by billable days. The calculator also shows the higher daily revenue needed to cover costs.
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