Count delivery and non-delivery work
Delivery hours cover the work that produces the agreed output. Non-delivery hours capture the project time you enter for activities such as planning, coordination or administration. The model adds both; it does not assume either category for you.
Dividing the full fee by delivery hours alone would overstate the project rate whenever non-delivery time is part of the work.
| Input | Effect on the calculation | Entry check |
|---|---|---|
| Project fee | Sets gross project revenue in the scenario | Use the fee for the same scope as the entered hours. |
| Delivery hours | Adds output-producing time to total hours | Include all planned delivery effort, not only visible meetings. |
| Non-delivery hours | Adds other entered project time | Keep this separate so hidden time remains visible. |
| Direct costs | Reduce the fee before the net hourly calculation | Enter project-specific costs only and do not exceed the fee. |
| Target hourly rate | Sets the maximum-hours comparison | This is your assumption, not a market recommendation. |
Work through the 12,000 fixed-fee example
The default fixture combines a 12,000 fee, 120 delivery hours, 20 non-delivery hours, 1,000 of direct costs and a 75-per-hour target.
| Step | Calculation | Result | Meaning |
|---|---|---|---|
| Total hours | 120 + 20 | 140 hours | All entered delivery and non-delivery time. |
| Net project fee | 12,000 − 1,000 | 11,000 | Fee remaining after entered direct costs. |
| Gross hourly rate | 12,000 ÷ 140 | 85.71/hour | Fee per entered hour before direct project costs. |
| Net project hourly rate | 11,000 ÷ 140 | 78.57/hour | Rate after entered direct costs, not take-home pay or profit. |
| Maximum hours at target | 11,000 ÷ 75 | 146.67 hours | The hours compatible with the entered target and net fee. |
| Hour margin | 146.67 − 140 | 6.67 hours | Remaining target-compatible time; negative means the plan exceeds it. |
Stress-test scope before accepting the displayed rate
| Scenario change | What moves | Question to revisit |
|---|---|---|
| More administration hours | Total hours rise; both hourly rates fall | Which coordination or revision work was omitted? |
| Higher direct costs | Net fee and net hourly rate fall | Are all project-specific expenses represented once? |
| Higher project fee | Gross and net rates rise | Does the fee still describe the same scope? |
| Higher target rate | Maximum compatible hours fall | Can the scope fit inside that smaller time budget? |
Know what the project “net” does not include
The net project rate subtracts only the direct costs entered in this scenario. It does not calculate income tax, general overhead, platform fees, unpaid collection time, leave, insurance or every cost of operating.
Recalculate when scope, hours, fee or direct costs change. Use the output to expose the assumptions behind a fixed project, not to set or recommend a market price.
How the Project Fee to Hourly Rate Calculator calculation works
netHourlyRate = netFee ÷ totalHours
- netHourlyRate
- Net hourly rate
- netFee
- The net Fee
- totalHours
- Total project hours
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
grossHourlyRate = projectFee ÷ totalHours
- grossHourlyRate
- Gross hourly rate
- projectFee
- Project fee
- totalHours
- Total project hours
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
totalHours = deliveryHours + nonDeliveryHours
- totalHours
- Total project hours
- deliveryHours
- Delivery hours
- nonDeliveryHours
- Non-delivery hours
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
maximumHoursAtTargetRate = netFee ÷ targetHourlyRate
- maximumHoursAtTargetRate
- Maximum hours at target
- netFee
- The net Fee
- targetHourlyRate
- Target hourly rate
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
rateMargin = maximumHoursAtTargetRate − totalHours
- rateMargin
- Hour margin to target
- maximumHoursAtTargetRate
- Maximum hours at target
- totalHours
- Total project hours
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
Test a 12,000 fee with 140 total hours, 1,000 direct costs and a 75 target rate.
Inputs used in the Project Fee to Hourly Rate Calculator worked example
| Input | Entered value | What it represents | Source class |
|---|---|---|---|
| Project fee | 12,000 currency units/project | Gross project fee before entered direct costs. | user assumption |
| Delivery hours | 120 hours/project | Hours spent delivering the project work. | user assumption |
| Non-delivery hours | 20 hours/project | Sales, administration and other project hours. | user assumption |
| Direct costs | 1,000 currency units/project | Direct project costs deducted from the fee. | user assumption |
| Target hourly rate | 75 currency units/hour | Your target net rate for the project. | user assumption |
Worked example: Project Fee to Hourly Rate Calculator
The calculator normalizes the inputs above, applies Net hourly rate, and returns the outputs below. The displayed result is therefore reproducible in the linked calculator.
| Measure | Result | Interpretation |
|---|---|---|
| Net hourly rate | 78.57 currency units/hour | Project fee less direct costs, divided by all entered hours. |
| Gross hourly rate | 85.71 currency units/hour | Gross project fee divided by all entered hours. |
| Total project hours | 140 hours/project | Delivery plus non-delivery hours. |
| Maximum hours at target | 146.67 hours/project | Net fee divided by the entered target hourly rate. |
| Hour margin to target | 6.67 hours/project | Maximum hours at target less entered total hours. |
Interpret the result and test Delivery hours
- Net hourly rate: 78.57 currency units/hour. Project fee less direct costs, divided by all entered hours.
- Gross hourly rate: 85.71 currency units/hour. Gross project fee divided by all entered hours.
- Total project hours: 140 hours/project. Delivery plus non-delivery hours.
- Maximum hours at target: 146.67 hours/project. Net fee divided by the entered target hourly rate.
- Hour margin to target: 6.67 hours/project. Maximum hours at target less entered total hours.
| Result | Baseline | Changed-input scenario | How to read it |
|---|---|---|---|
| Net hourly rate | 78.57 currency units/hour | 72.37 currency units/hour | Project fee less direct costs, divided by all entered hours. |
| Gross hourly rate | 85.71 currency units/hour | 78.95 currency units/hour | Gross project fee divided by all entered hours. |
| Total project hours | 140 hours/project | 152 hours/project | Delivery plus non-delivery hours. |
| Maximum hours at target | 146.67 hours/project | 146.67 hours/project | Net fee divided by the entered target hourly rate. |
| Hour margin to target | 6.67 hours/project | -5.33 hours/project | Maximum hours at target less entered total hours. |
Checks that are specific to Project Fee to Hourly Rate Calculator
- Direct costs cannot exceed the project fee.
- Total project hours must be positive.
- Target hourly rate must be positive.
What this Project Fee to Hourly Rate Calculator guide includes and excludes
- All hours are attributable to this project.
- Direct costs are entered before tax.
- One target rate applies to all hours.
Sources and method boundary
- Project Fee to Hourly Rate Calculator methodology — Wage101 (accessed 2026-07-27): Canonical formulas, units, validation, calculator behavior and limitations.