Glossary
Effective billing rate
The actual average hourly rate an agency realizes on a project or client, calculated as total revenue divided by total hours worked — which can differ significantly from the quoted or standard rate.
The actual average hourly rate an agency realizes on a project or client, calculated as total revenue divided by total hours worked — which can differ significantly from the quoted or standard rate.
Example
A project quoted at a $150/hour standard rate, but delivered with 20 unbilled hours of scope creep on top of the contracted 100 hours, has an effective billing rate of $125/hour ($15,000 revenue ÷ 120 actual hours).
Why it matters for agencies
Effective billing rate is often the clearest single number showing the cost of unmanaged scope creep — it's the gap between what an agency thinks it's earning per hour and what it's actually earning once every hour worked, billed or not, is counted.