Plain-language questions
Ask for effective hourly rate per month, customer or product in the SQL Explorer with AI. The AI writes the SQL, you see the query and run it yourself; the AI only receives metadata.
KPI · Projects and time
Effective hourly rate: formula and example.
Effective hourly rate is invoiced revenue divided by all hours spent on a project or client. It shows what an hour of work actually earns after overruns, discounts and written-off time. On fixed-price work in particular, the effective hourly rate is a fairer measure than the agreed rate.
Effective hourly rate formula
Invoiced revenue ÷ total hours spent
Worked example
Acme Groothandel fitted out a warehouse for a customer at a fixed price of €48,000, budgeted at 500 hours: €96 per hour. In the end 600 hours were spent. The effective hourly rate is €48,000 ÷ 600 = €80.
Fictitious figures for Acme Groothandel, a sample wholesaler.
How to read this KPI
An effective rate close to the average hourly rate means little revenue is leaking away. A large gap points to hour budgets being exceeded or work not being charged. Compare by project type and by client to see which work you should price differently.
Pitfalls with effective hourly rate
- Using only billable hours as the denominator, so unbilled hours disappear and the rate looks too high.
- Calculating it on a running project while part of the revenue has yet to be invoiced.
- Leaving recharged materials and expenses in revenue, so the rate no longer reflects hours.
SQL & DAX
Calculating effective hourly rate in SQL and DAX
Two examples on a fictitious data warehouse for Acme Groothandel: a PostgreSQL query and a measure for a Power BI model. Adjust table and column names to your own model.
SELECT project_id,
SUM(invoiced_amount) AS invoiced,
SUM(hours) AS hours_spent,
ROUND(SUM(invoiced_amount) / NULLIF(SUM(hours), 0), 2) AS effective_hourly_rate,
ROUND(SUM(hours * hourly_rate) FILTER (WHERE billable)
/ NULLIF(SUM(hours) FILTER (WHERE billable), 0), 2) AS rate_card_average
FROM time_entries
GROUP BY project_id
ORDER BY effective_hourly_rate;Hours Spent = SUM ( TimeEntries[Hours] )
Effective Hourly Rate = DIVIDE ( SUM ( TimeEntries[InvoicedAmount] ), [Hours Spent] )In ENABLE
Tracking this KPI in ENABLE
In your Power BI dashboard
Define the KPI as a measure in your Power BI model and show it in the portal, with "Last refreshed" next to it. Access profiles and optional row-level security decide who sees which figures.
Custom dashboards (pilot)
Add the KPI as a tile to a custom dashboard, compared with last year. The Dashboard Builder is a pilot and can be switched on per client.
Monthly targets
With the built-in Targets app you set a target for the KPI per month, so you see actuals and target side by side.
FAQ
Frequently asked questions
How do you calculate effective hourly rate?
Divide invoiced revenue for time by the total hours spent on the work, including hours that were not invoiced. Strip recharged material costs out of revenue. Ideally calculate it on completed projects.
Why is my effective hourly rate lower than my rate?
Because hours were spent that were not fully paid for, for example through overruns on a fixed price, discounts or write-offs. Every extra hour you work without billing pulls the effective rate down. Look per project to see where those hours are.
When is effective hourly rate useful?
Mainly on fixed-price projects and prepaid blocks of hours, where the agreed rate says little about what you really earn. It helps when reviewing projects and pricing new quotes. Compare it with your hourly cost rate to see the margin.
Further reading
- KPI libraryProject and time KPIs: formulas and examplesProject KPIs show whether hours are billable, budgets hold and projects finish on time. The data comes from your time tracking and project tools, linked to invoices from your accounting system.Read more
- ResourcesHow to build a KPI dashboard: steps and examplesA KPI dashboard is an overview of the key figures you use to steer towards your goals, such as revenue, margin, on-time delivery or absenteeism. A good KPI dashboard does not start with the software, but with the decisions it needs to support. You then choose a limited number of KPIs, define them, sketch the dashboard and only then build it.Read more
- SolutionPower BI dashboard portal: share dashboards securelyShare your Power BI dashboards securely in your own portal, with role-based access.Read more
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