priceperhour

Price per hour, or hourly rate, is a unit of pricing that expresses the amount charged or paid for services for every hour of work. It is commonly used in freelance work, consulting, professional services, tutoring, and some consumer services, as well as for internal budgeting in organizations.

Calculation and usage: For service providers, the price per hour can be set as a standard billing rate or derived from project pricing by dividing the total project price by the estimated hours. For example, a consultant may charge $120 per hour, or a $4,800 project estimated at 40 hours yields the same rate. For employees, the wage per hour is typically calculated by dividing annual compensation by annual working hours, such as an $80,000 salary divided by 2,080 hours. Billable hours are hours charged to a client, excluding time not directly attributable to a project.

Factors affecting the rate: Skill level, specialization, certifications, industry norms, geographic location, demand, and overhead costs influence hourly prices. Urgent work, complex tasks, and the inclusion of value-added services can raise rates. Client size, contract terms, and whether time is billed in minimum increments or rounded can also shape the price per hour.

Advantages and limitations: An hourly rate offers simplicity and transparency, making budgeting and comparisons straightforward. However, it can encourage scope creep, may not reflect the total value delivered, and requires careful tracking of time. Providers often use variations such as minimums, caps, or blended pricing to address these issues.

See also: pricing model, hourly wage, billable rate, overhead, value-based pricing.