Accountants Project Cost (Daily) Calculator
Estimate the daily cost of delivering accounting work and the charge-out rate needed to cover costs and meet a target profit margin.
Overview
This Accountants Project Cost (Daily) Calculator helps practices and independent accountants estimate the daily cost of delivering client work. Enter annual pay, employment costs, allocated overheads, realistic billable days and a target profit margin to calculate a daily charge-out rate.
How it works
The calculator first adds annual pay, employment costs and allocated business overheads to estimate the total annual delivery cost. It divides this amount by billable days to find the cost per billable day. It then increases that daily cost so that the remaining amount represents your chosen profit margin. For example, a 25% margin means costs make up 75% of the charge-out rate.
How to use this calculator
- 1Enter the annual salary or owner draw for the person delivering the work.
- 2Add employment costs as a percentage of annual pay.
- 3Enter the annual overheads to allocate to this work.
- 4Estimate the number of days you can realistically bill each year.
- 5Choose your target profit margin and review the suggested daily rate.
Example Calculation
Annual salary or owner draw
$60,000
Employment costs
20%
Annual business overheads
$18,000
Billable days per year
210
Target profit margin
25%
Target daily charge-out rate
$571
With annual costs of 90,000 and 210 billable days, the delivery cost is about 429 per day. A 25% target profit margin produces a daily charge-out rate of about 571 and annual revenue of about 120,000.
Frequently asked questions
What is a daily charge-out rate?
A daily charge-out rate is the amount charged to a client for one day of professional work. It should normally cover delivery costs, business overheads and the profit you want to earn.
How many billable days should an accountant use?
Use the number of days you expect to invoice after allowing for annual leave, public holidays, training, sales activity, administration, internal meetings and unplanned downtime.
What should be included in annual overheads?
Relevant overheads may include accounting and practice software, professional indemnity insurance, office costs, subscriptions, marketing, equipment and administrative support.
What is the difference between profit margin and markup?
Profit margin is profit as a percentage of revenue, while markup is profit as a percentage of cost. This calculator uses profit margin, so a 25% margin requires a higher rate than simply adding 25% to cost.
Should project-specific expenses be included?
Yes. If a project has travel, subcontractor, specialist software or other direct costs, add them separately to the client quote or include an appropriate share in your overhead figure.
Can I use this calculator for fixed-fee work?
Yes. Use the resulting daily rate as a benchmark, then multiply it by the expected delivery days and add any direct project expenses when setting a fixed fee.
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Assumptions and warnings
Assumptions
- All entered annual pay, employment costs and overheads relate to the work being priced.
- Billable days reflect the days that can realistically be invoiced during the year.
- The target margin is calculated as profit divided by revenue, not as a markup on cost.
- The result is an estimate and does not include costs or income that have not been entered, such as taxes, financing or exceptional project expenses.
Warnings
- This calculator provides a business pricing estimate only and is not financial, tax or professional advice.
- Review your rates regularly because costs, capacity, client requirements and taxes can change.