Effective Hourly Rate
Effective hourly rate is what you earned per hour once you count every hour, including unbilled ones. It is usually lower than your quoted rate, because unbilled time never shows in that number.
What it means
Your quoted rate is what you charge for the hours a client sees and agrees to pay for. Your effective hourly rate is different. It is the money left after costs, divided by every hour the work took. That includes time on site, plus every unbilled call, visit and chase. The two numbers are rarely the same.
Check this number against your own target rate. Do not use the quoted one. A quoted rate can look healthy on the invoice. The effective rate can still be low once you add the unbilled hours.
You quote at $60 an hour. A job pays $600 for what looks like ten hours of work. Two more hours went into quoting, calls, and a revisit that you never billed. The effective hourly rate on that job is $50, below the $60 you quoted.
Tracking only the quoted rate and assuming it shows what you earn. An effective-rate check exists to catch the unbilled hours behind a job.
See also
Where this shows up
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