Accountants Profit Target (Hourly) Calculator FAQ
Answers to common questions about accounting practice revenue targets, hourly rates, billable utilization, collections, and profit planning.
Use these answers to understand the calculator inputs and interpret its results as business planning estimates. They are not financial, tax, or accounting advice.
Using the calculator
Questions about the purpose of the tool and the figures to enter.
What does the Accountants Profit Target (Hourly) Calculator estimate?
It estimates the annual revenue and average hourly billing rate needed to cover annual overheads, owner pay, and a chosen profit target.
Who can use this calculator?
It can be used by sole practitioners, partners, and accounting practice owners who want a high-level pricing and capacity planning estimate.
Should all practice costs be entered as overheads?
Include recurring operating costs you expect the practice to fund, such as staff, rent, software, insurance, and marketing. Avoid counting owner pay twice.
Hours, utilization, and collections
Questions about the capacity assumptions that affect the result.
What is billable utilization?
It is the percentage of total working time expected to be invoiced to clients. It excludes time spent on work that cannot be billed.
Why are working weeks lower than 52 in many plans?
A lower figure allows for holidays, training, public holidays, sickness, and other periods when normal work is not expected.
What should be included in the collection rate?
Use the expected percentage of invoiced fees that will be received after allowing for discounts, credit notes, write-offs, and unpaid invoices.
Does a collection rate below 100% increase the target rate?
Yes. The same annual revenue target must be generated from fewer effectively collected billable hours.
Results and planning
Questions about interpreting the revenue, rate, and margin outputs.
Is the required hourly billing rate the price I must charge every client?
No. It is an average recovery target. Individual fees can vary by service, complexity, scope, client value, and delivery efficiency.
What is the target profit margin shown by the calculator?
It is the annual profit target divided by required annual revenue, expressed as a percentage.
Can I use the result when setting fixed fees?
Yes. Compare a fixed fee with the estimated time required to deliver the work. This indicates its implied hourly recovery against the practice target.
What if my current pricing is below the calculated rate?
The result suggests that the entered cost, profit, capacity, and collection assumptions may not all be met at the current average recovery rate.
How is the required hourly billing rate calculated?
Required annual revenue is divided by annual working hours adjusted for billable utilization and the collection rate.
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