Use one horizon for both contract scenarios
| Layer | Calculation | Meaning |
|---|---|---|
| Annual billable hours | Hours/week × working weeks | Shared comparison horizon |
| Current and renewal gross | Each rate × annual hours | Before friction |
| Gap cost | Gap hours × current rate | Entered interruption value |
| Renewal costs | User-entered amount | Other renewal friction |
| Renewal advantage | Renewal gross − current gross − friction | Cost-adjusted difference |
Worked example: a 10-per-hour headline increase
| Measure | Calculation | Result |
|---|---|---|
| Billable horizon | 20 × 48 | 960 hours |
| Current gross | 100 × 960 | 96,000 |
| Renewal gross | 110 × 960 | 105,600 |
| Renewal friction | 2,000 + 40 × 100 | 6,000 |
| Renewal advantage | 105,600 − 96,000 − 6,000 | 3,600 |
| Effective renewal change | 103.75 − 100 | 3.75/hour |
Headline and effective rate deltas are not the same
The proposed rate is 10 higher, but entered costs and gap time reduce the cost-adjusted effective increase to 3.75/hour over the shared horizon.
Check renewal friction explicitly
- Use the same billable hours and working weeks for both rates.
- Confirm gap hours and renewal costs rather than hiding them in a rate.
- Review scope, payment and contract terms outside the calculator.
- Do not infer renewal probability, tax or collection outcomes.
How the Contract Renewal Value calculation works
renewalAdvantage = renewalGross − currentGross − renewalCosts − gapCost
- renewalAdvantage
- Renewal advantage
- currentRate
- Current hourly rate
- renewalRate
- Renewal hourly rate
- billableHoursPerWeek
- Billable hours per week
- workingWeeks
- Working weeks
- renewalCosts
- Renewal costs
- gapHours
- Gap hours
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
gapCost = gapHours × currentRate
- gapCost
- Gap cost at current rate
- currentRate
- Current hourly rate
- renewalRate
- Renewal hourly rate
- billableHoursPerWeek
- Billable hours per week
- workingWeeks
- Working weeks
- renewalCosts
- Renewal costs
- gapHours
- Gap hours
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
effectiveHourlyRateDelta = renewalEffectiveHourlyRate − currentEffectiveHourlyRate
- effectiveHourlyRateDelta
- Effective hourly-rate delta
- currentRate
- Current hourly rate
- renewalRate
- Renewal hourly rate
- billableHoursPerWeek
- Billable hours per week
- workingWeeks
- Working weeks
- renewalCosts
- Renewal costs
- gapHours
- Gap hours
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
100 versus 110 per hour for 20 hours over 48 weeks, with 2,000 cost and 40 gap hours.
Inputs used in the Contract Renewal Value worked example
| Input | Entered value | What it represents | Source class |
|---|---|---|---|
| Current hourly rate | 100 currency units/hour | Current contract hourly rate. | user assumption |
| Renewal hourly rate | 110 currency units/hour | Proposed renewal hourly rate. | user assumption |
| Billable hours per week | 20 hours/week | Expected billable hours in both scenarios. | user assumption |
| Working weeks | 48 weeks/year | Working weeks in the comparison horizon. | user assumption |
| Renewal costs | 2,000 currency units | One-time costs assigned to the renewal. | user assumption |
| Gap hours | 40 hours | Billable hours lost during the renewal gap. | user assumption |
Worked example: Contract Renewal Value
The calculator normalizes the inputs above, applies Renewal advantage, and returns the outputs below. The displayed result is therefore reproducible in the linked calculator.
| Measure | Result | Interpretation |
|---|---|---|
| Renewal advantage | 3,600 currency units/year | Renewal gross minus current gross, renewal costs and gap cost. |
| Gap cost at current rate | 4,000 currency units | Gap hours multiplied by current rate. |
| Effective hourly-rate delta | 3.75 currency units/hour | Renewal effective rate after costs minus current effective rate. |
Interpret the result and test Renewal hourly rate
- Renewal advantage: 3,600 currency units/year. Renewal gross minus current gross, renewal costs and gap cost.
- Gap cost at current rate: 4,000 currency units. Gap hours multiplied by current rate.
- Effective hourly-rate delta: 3.75 currency units/hour. Renewal effective rate after costs minus current effective rate.
| Result | Baseline | Changed-input scenario | How to read it |
|---|---|---|---|
| Renewal advantage | 3,600 currency units/year | 14,160 currency units/year | Renewal gross minus current gross, renewal costs and gap cost. |
| Gap cost at current rate | 4,000 currency units | 4,000 currency units | Gap hours multiplied by current rate. |
| Effective hourly-rate delta | 3.75 currency units/hour | 14.75 currency units/hour | Renewal effective rate after costs minus current effective rate. |
Checks that are specific to Contract Renewal Value
- The worked example is calculated through the same shared-work-logic engine as the planner.
- Non-finite and out-of-range assumptions return an input error.
- Result cards, trace, CSV, PDF and methodology bind to named engine result fields.
What this Contract Renewal Value guide includes and excludes
- Both scenarios use the same billable work horizon.
- Gap hours are valued at the current rate.
Sources and method boundary
- ilostat.ilo.org context for the market-neutral method boundary — ilostat.ilo.org (accessed 2026-07-28): Context for the market-neutral time and earnings boundary; the calculator and methodology define the canonical calculation method.
- www.ilo.org context for the market-neutral method boundary — www.ilo.org (accessed 2026-07-28): Context for the market-neutral time and earnings boundary; the calculator and methodology define the canonical calculation method.
- Contract Renewal Value methodology — Wage101 (accessed 2026-07-28): Canonical formulas, units, validation, calculator behavior and limitations.