Business

Effective Billing Rate

Definition

The actual revenue earned per hour on a client engagement when all time spent — including calls, corrections, and administrative follow-up — is divided into total fees collected. Unlike a standard billing rate, the effective billing rate reveals the true profitability of a client relationship by accounting for non-billable time that still consumes firm capacity. A low effective billing rate signals that a client is consuming more resources than the fee justifies.

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