Harborfield reference · Pricing & capacity

Effective Hourly Equivalent

The effective hourly equivalent is an assumed price for one defined service unit divided by the estimated delivery hours for that same unit.

This is a price-to-time conversion, not a recommended hourly rate.

Definition and formula

What the calculation measures

Spreads the assumed price over the delivery time for one unit.

E = P ÷ H

Price per unit ÷ delivery hours per unit

E = effective hourly equivalent; P = price per service unit; H = delivery hours per service unit.

Unit: USD / delivery hour.

Required inputs

Price per service unit (USD / unit): Your assumed price for one fixed scope of work, including its revisions. Enter 0.01–1,000,000 USD; this is not a suggested price.
Delivery time per service unit (hours / unit): Include preparation, delivery, communication, and revisions for that unit. Enter 0.01–744 hours.

Monthly delivery hours are not an input to this hourly equivalent. The calculator requests them for its separate monthly capacity outputs.

Illustrative example

Simple assumptions, visible arithmetic

These invented values demonstrate the formula. They are not client data, benchmarks, average market values, or observed business outcomes.

Illustrative inputs for Effective Hourly Equivalent
Input	Assumption
Price per service unit	$600.00 USD / unit
Delivery time per service unit	10 hours / unit

$600 ÷ 10 hours = $60.00 USD / delivery hour

The assumed fixed price corresponds to $60 for each estimated delivery hour. It does not establish a suitable price or how much the professional will earn.

How to interpret it

The result expresses a fixed service price on a delivery-hour basis. It helps compare stated price-and-time scenarios when the service scope is comparable. It supplies no external evidence that customers will accept a price.

What it does not mean

It is not a fair market price, market rate, expected earnings, employee wage, or take-home income.
It does not deduct expenses or taxes, or spread the price over every working hour in the business.
It does not turn a project or retainer into an automatically comparable service. The scope and included hours must first be defined.

Common mistakes

Counting only hands-on delivery and leaving out preparation, communication, or included revisions understates the time per unit.
Comparing unlike scopes can make a higher equivalent look preferable without explaining what the customer receives.
Treating the result as a rate to charge confuses an input-based conversion with observed market evidence.

Assumptions and limitations

The estimate changes with the assumed delivery hours; the model does not measure those hours for you.
Business-wide administration, marketing, and time off are outside the per-unit delivery-hour denominator. The result is not compensation for all working time.
Demand, customer willingness to pay, discounts, cancellations, actual sales, expenses, and profit are not modeled.
The public calculator requires a positive price and positive hours, with up to two decimal places. A displayed dollar amount is rounded to cents; calculations retain the underlying value.

Use the definition in context

All Business Metrics

Illustrative inputs for Effective Hourly Equivalent

Input

Assumption

Price per service unit

$600.00 USD / unit

Delivery time per service unit

10 hours / unit