How Hidden Hours Impact Your Effective Hourly Rate

The Hidden Hours Wizard helps you determine your Effective Hourly Rate (EHR) by accounting for all your work hours—not just the billable ones. Here’s why it matters and how it works.

Why Include Hidden Hours in Your EHR?

If you don’t factor in hidden hours, your EHR shows an inflated earning rate. For example:

• You worked 10 billable hours in a week and earned $500. Without hidden hours, your EHR appears to be $50/hour.
• But you also spent 5 extra hours on admin, marketing, and travel. Including these hours, your real EHR is only $33.33/hour.

This clearer picture allows you to make informed pricing adjustments and manage your workload more effectively.

The Proportional Allocation Method

Hidden hours are distributed across your jobs based on the time each job contributes to your total billable hours.

Example:

• Total billable hours per week: 20
• Total hidden hours per week: 10
• Job A: 10 billable hours (50%)
• Job B: 5 billable hours (25%)
• Job C: 5 billable hours (25%)

Hidden Hour Allocation:

• Job A gets: 10 x 50% = 5 hours
• Job B gets: 10 x 25% = 2.5 hours
• Job C gets: 10 x 25% = 2.5 hours

Viewing Your True EHR

Here’s how the system calculates:

Without Hidden Hours:

EHR = Net Profit ÷ Billable Hours
Example: $500 ÷ 10 hours = $50/hour

With Hidden Hours (Enabled):

EHR = Net Profit ÷ (Billable Hours + Hidden Hours)
Example: $500 ÷ (10 + 5) hours = $33.33/hour

This helps you understand your true earning power.

Common Questions

Q: What happens if I disable hidden hours?

• Hidden hours will no longer be included in EHR calculations. This might be helpful when comparing yourself to standard industry rates.

Q: Can hidden hours apply to past jobs?

• No. Hidden hours only apply to jobs starting on or after the Effective Date you set in the Wizard.

For examples of how to adjust your rates based on hidden hours, read Common Use Cases for the Hidden Hours Wizard.

Updated on: 23/11/2025