Accountants Revenue Target Calculator
Estimate the annual and monthly revenue an accounting practice needs to cover overheads and achieve a target profit margin.
Overview
Use this Accountants Revenue Target Calculator to estimate the fee income your practice needs to cover annual overheads and produce a chosen profit margin. Enter your billable team size, available working time, expected utilisation and average charge-out rate to compare your revenue target with estimated capacity.
How it works
The calculator first estimates available annual working hours from the size of your billable team, weekly hours and working weeks. It applies billable utilisation to estimate chargeable hours, then multiplies those hours by the average charge-out rate to show revenue capacity. Your revenue target is calculated by dividing annual overheads by one minus the target profit margin. For example, if overheads are 75% of revenue at a 25% profit margin, revenue must be four-thirds of overheads.
How to use this calculator
- 1Enter the number of staff who can bill client work.
- 2Add the typical working hours and working weeks for each person.
- 3Set a realistic billable utilisation percentage.
- 4Enter your average realised hourly charge-out rate.
- 5Add annual operating overheads and your target profit margin.
- 6Review the annual and monthly revenue targets and required utilisation.
Example Calculation
Billable staff
4
Working hours per person each week
37.5
Working weeks per year
46
Expected billable utilisation
70%
Average charge-out rate
$150
Annual overheads
$300,000
Target net profit margin
25%
Target annual revenue
$400,000
With annual overheads of 300,000 and a 25% target profit margin, the practice needs annual revenue of 400,000, or about 33,333 per month. At the stated staffing and rate, this requires approximately 38.6% billable utilisation.
Frequently asked questions
What is a revenue target for an accounting firm?
A revenue target is the amount of fee income the firm aims to generate over a period, usually a year, to pay its costs and achieve its intended profit.
How is the target annual revenue calculated?
The calculator divides annual overheads by the share of revenue remaining after the target profit margin. For a 25% margin, overheads are assumed to represent 75% of revenue.
What is billable utilisation?
Billable utilisation is the percentage of available working time spent on client work that can be charged or recovered through fees. It excludes administration, training, marketing and leave.
Why is my required utilisation above 100%?
A figure above 100% means the current team size, available hours and average rate are not enough to meet the revenue target. You may need to review costs, pricing, capacity or the target margin.
Should overheads include owner salaries?
Include costs you need the practice to pay from revenue, including salaries where appropriate. Use a consistent definition when setting both overheads and the profit margin target.
Does this calculator include tax or VAT?
No. It uses the figures you enter as operating revenue and overheads. Consider tax, VAT or sales tax, debtor losses and other business-specific items separately when planning.
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Assumptions and warnings
Assumptions
- Results are estimates based on the annual overheads, average charge-out rate and utilisation you enter.
- The target profit margin is calculated after the overheads entered and before any items not included in those overheads.
- Revenue is treated as fee income and does not separately account for VAT, sales tax, bad debts or write-offs.
- The monthly target simply divides annual revenue by 12 and does not reflect seasonal billing patterns.
Warnings
- This calculator provides a business planning estimate only and is not financial or accounting advice.
- Review your actual cost base, tax position, billing mix and cash flow before making significant business decisions.