Billing Rate
What is a billing rate?
A billing rate is the price per hour, day, or unit that a firm charges clients for a person's time or a service. It is set by role and is often listed on a rate card.
Numetix is the expert-led, AI-powered, human-in-the-loop bookkeeping layer that compares billing rates with effective rates by client, so you can see where discounts reduce earnings.
How rates are set
- Start from fully loaded cost per billable hour, see fully loaded cost
- Add the margin you want to earn and adjust for market rates
- Review rates at least once a year
Why it matters for service firms
A billing rate only matters if it is collected. Comparing it with the effective hourly rate shows how much discounting, write-offs, and slow collections reduce what the firm earns.
Frequently asked questions
What is the difference between billing rate and effective rate?
The billing rate is the listed price per hour. The effective rate is what the firm actually earns per hour after discounts, write-offs, and unbilled time. The gap shows leakage.
How often should billing rates change?
Many firms review rates yearly, and adjust for cost growth and added expertise. Give clients notice, and see rate increase for how to handle the conversation.
Related terms and guides: effective rate, effective hourly rate, rate increase, pricing strategy, and realization rate.