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How to calculate Effective hourly rate

The Effective hourly rate formula, with plain worked examples you can check yourself.

Effective hourly rate = I ÷ H

Worked examples

I = 1875 · H = 25Effective hourly rate = 75
I = 400 · H = 20Effective hourly rate = 20
I = 1000 · H = 25Effective hourly rate = 40

How to use it

  1. Write down the values for each letter in the formula.
  2. Do the brackets first, then divide or multiply.
  3. Check the units before you compare results.
  4. Compare the answer with last period or with a competitor to see if it is good or bad.

This formula belongs to Business Models.

Related terms

FranchiseCompetitive moatCash cowFreemiumProduct-market fitSubscription model

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