Billing Rate
A billing rate is the price per hour charged to a client for work performed. Time tracking tools use billing rates to calculate invoice amounts automatically from logged hours. Rates can be set at the project level, the user level, or the task level — with user-level rates typically used when different team members bill at different rates.
RELATED CONCEPTS
The three levels of billing rate
Project-level rate: All work on a project bills at the same rate, regardless of who does the work. Simple to manage; appropriate when all team members are equivalent in billing value (solo freelancer, homogeneous team).
Example: “Website redesign project — all work billed at £100/hour”
User-level rate: Each team member has their own billing rate, applied regardless of which project they work on. More complex to manage but necessary when junior and senior staff bill at different rates.
Example: “Senior designer: £120/hour; Junior designer: £80/hour — applied across all projects”
Task-level rate: Different tasks on the same project bill at different rates. Used when a project includes work at multiple rate tiers (strategy vs implementation vs admin).
Example: “Strategy work: £150/hour; Implementation: £100/hour; Project management: £80/hour”
Which time tracking tools support which rate levels
| Tool | Project rate | User rate | Task rate |
|---|---|---|---|
| Toggl Track Starter | Yes | No | No |
| Toggl Track Premium | Yes | Yes | No |
| Harvest | Yes | Yes | Yes |
| Clockify free | Yes | No | No |
| Clockify Pro | Yes | Yes | Yes |
| Hubstaff | Yes | Yes | No |
| Timely | Yes | Yes | No |
Key difference: Toggl Track Starter only supports project-level rates. If you need different rates for different team members on the same project, you need Toggl Premium ($18/user/mo) or Harvest ($12/user/mo).
Effective rate vs billing rate
Your billing rate is what you charge. Your effective rate is what you earn.
Billing rate: £100/hour Utilisation: 65% (26 billable hours per 40-hour week) Effective rate: £100 × 0.65 = £65/hour (you earn £65 for every hour you’re available to work, including non-billable time)
This is why utilisation matters as much as billing rate. Raising your rate by 10% is equivalent to raising your utilisation by 10 points — but raising your rate requires client negotiation, while raising utilisation requires process improvement.
Billing rate vs cost rate
Time tracking tools that handle profitability reporting (Harvest, Clockify Pro) support two rates:
- Billing rate (external): what you charge the client
- Cost rate (internal): what the person costs you per hour (salary + benefits ÷ working hours)
The difference between billing rate and cost rate, applied across logged hours, gives you project margin:
Project revenue (billing rate × billed hours) - Project cost (cost rate × total hours worked) = Project profit
This calculation requires both rates to be configured. Most tools set billing rates; cost rates require additional setup.
Rate negotiation and rate transparency
UK and EU salary transparency requirements are increasing, but billing rate transparency remains a business decision. Most agencies do not publish billing rates publicly.
For clients asking about your rates, considerations:
- Provide a rate range rather than a fixed rate if the scope is unclear
- Distinguish between different service tiers (strategy vs execution vs support)
- Be explicit about what’s included in the rate (revisions, project management, communication)
Rate confusion at invoice time is one of the most common causes of client disputes. Confirm rates in writing before starting work and ensure your time tracking tool has the agreed rates configured.