Glossary
Effective Hourly Rate
Also known as: Effective rate, realised rate
Effective hourly rate is the money actually collected from a client or period divided by every hour worked to earn it, including non-billable time. It is the truest measure of what work earns: a studio quoting ₹1,800 an hour that collects ₹3,00,000 for 220 hours of total effort has an effective rate of about ₹1,363.
The gap between the stated rate and the effective rate is where services margins quietly die. Every hour of proposals, unpaid revisions, project management the fee did not cover, and every invoice settled below face value dilutes the rate — without any line item ever announcing it.
Computed per client, the effective rate is one of the most decision-useful numbers an agency has. Two clients on identical rate cards routinely differ by 30–40% once revision cycles and scope sprawl are counted, and the difference tells you which relationships need a scope conversation rather than a discount.
The effective rate is also the honest input for pricing fixed fees and retainers: a fixed fee is just an effective rate you have committed to in advance, so knowing what similar work actually earned historically is the difference between pricing and guessing.
How Workclave handles this
Workclave gives you the denominator automatically — every hour, billable or not, already attributed to a client and project. Effective rate per client becomes a filter on real data instead of a quarterly archaeology project. effective hourly rate calculator.
Related terms
Realisation rate is the percentage of hours worked on client engagements that is actually invoiced to the client. It is calculated as hours billed divided by hours worked. A firm that works 120 hours for a client but invoices 102 has an 85% realisation rate — the other 18 hours were written off before the invoice went out.
Read definition →A blended rate is a single bill rate quoted for a team of mixed seniority, calculated as the hours-weighted average of each role's rate. If a project uses 60 senior hours at ₹2,500 and 140 junior hours at ₹1,200, the blended rate is ₹1,590 — one number that stands in for the whole staffing mix.
Read definition →Billable hours are the units of work time that can be charged to a client under a contract or engagement. They exclude internal activities like admin, training, or bench time that the client does not pay for. For services firms, billable hours are the direct link between effort and revenue.
Read definition →Project margin is what remains of an engagement's revenue after the cost of delivering it — primarily the hours consumed, priced at each contributor's cost rate. A ₹6 lakh project that consumes 320 hours at a ₹900 blended cost rate has a delivery cost of ₹2.88 lakh and a gross margin of 52%.
Read definition →