What is the lowest rate that is not a subsidy?
The sheet opens at $150 an hour and shows $86,560 of profit before the owner is paid anything, which looks comfortable and is not the question. Goal Seek answers the question: $117.56 to break even, $162.53 to pay the owner properly.
Work Starter Goal Seek free
After you install, this is the model to open.
What Rate Do I Have to Charge?
- In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
- Click Start from a template and put that name in the search box.
- Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.
The answer
Three runs of the same model, each answering a different question:
- Break-even rate
- $117.56 an hour
- Rate that pays the owner
- $162.53 for $120,000
- The difference
- $44.97 an hour, 38%
- Profit at $150
- $86,560 before the owner
The break-even rate is worth keeping somewhere visible, because it is the number that says when a discount stops being a discount and starts being a subsidy. The second run is the one that matters: the distance between covering the costs and paying the owner properly is $44.97 an hour, and that is invisible if you only ever look at profit. A third run makes the point sharper. Hold the rate at $150 and ask realization to carry the target instead, and it comes back at 0.997, which is unreachable: at $150 an hour this practice cannot pay its owner however well it bills, so the problem is the rate and not the write-offs.
The model
A whole practice on one screen: chargeable hours, realization, salaries, on-costs and overhead, with fee income and profit falling out of them. Goal Seek changes the rate until profit hits the target you name.
| Chargeable hours | 2,900 |
| Realization rate | 92% |
| Opening rate | $150 an hour |
| Total cost to run the firm | $313,640 |
| Rate that hits the target | solved |
Once it is in your sheet
- The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
- Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
- Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.
Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.
Next question
- Which few tasks are eating the whole calendar?How Long Do Our Tasks Really Take?
- How much should you pad the next estimate?How Wrong Are Our Estimates, Usually?
- What three-point estimate does your history give?What Shape Are Our Task Durations?
- How many people does the rota actually need?Cover Every Hour With the Fewest People
- What is a point of utilization actually worth?Will the Team Bill Enough Hours?
- Twelve recurring tasks timed before and after an automation rollout. The paired test makes the 23-minute average saving certain, the sheet turns it into a 13-week payback, and the two tasks that got worse are the real finding.Did the Automation Deliver?
Every model like this one, and the method behind them: What-if analysis in Google Sheets.