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Average Billing Rate Formula:
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The Average Billing Rate (ABR) formula calculates the average hourly rate generated from billable work. It measures the efficiency and profitability of professional services by dividing total billable revenue by total billable hours worked.
The calculator uses the ABR formula:
Where:
Explanation: This formula provides insight into the average revenue generated per billable hour, helping businesses optimize pricing and resource allocation.
Details: Calculating ABR is essential for service-based businesses to evaluate pricing strategies, measure profitability, identify underperforming services, and make informed decisions about resource allocation and business development.
Tips: Enter total billable revenue in dollars and total billable hours in hours. Both values must be positive numbers greater than zero for accurate calculation.
Q1: What is a good average billing rate?
A: A good ABR varies by industry and expertise level, but generally ranges from $75-$300/hr for professional services. It should cover all costs and provide reasonable profit margins.
Q2: How does ABR differ from hourly rate?
A: ABR is the actual average rate achieved across all billable work, while hourly rate is the stated price. ABR accounts for discounts, write-offs, and non-billable time.
Q3: What factors affect ABR?
A: Factors include service type, client negotiations, employee expertise, market rates, efficiency of work, and the amount of non-billable time required.
Q4: How often should ABR be calculated?
A: ABR should be calculated monthly for ongoing monitoring and quarterly for strategic planning. Regular tracking helps identify trends and opportunities for improvement.
Q5: Can ABR be used to set prices?
A: Yes, ABR analysis helps determine if current pricing is adequate and informs decisions about rate increases, service bundling, or eliminating low-margin services.