LegalPracticeTools

Practice Break-Even Calculator

Work out the average rate a practice income target requires once realization and collection are applied.

Last reviewed

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Free · No sign-up · Runs in your browser

Setting a rate by looking at what other practitioners charge tells you what the market looks like. It does not tell you whether that rate supports the practice you actually have, with your hours and your collection experience.

This calculator answers that directly: given a target and the hours available, what average rate does the year require - and how much of it exists only to cover what is being lost between recording time and receiving money?

Your numbers

Results update as you type. Nothing is sent anywhere.

Result

Required rate

$238.78

Added by leakage

$30.08

Rate if nothing were lost
$208.70
Overall yield
87.4%
Hours assumed
1,150
Monthly target
$20,000
Monthly hours needed
95.8

This tool performs arithmetic on the values you enter. It does not provide legal advice and does not create an attorney-client relationship.

The leakage premium is what write-downs and unpaid invoices add to the rate you must charge. Fixing collection lowers the rate you need.

Rate changes need client agreement and, for existing matters, usually written notice under the engagement terms.

How to use the practice break-even calculator

  1. Enter the revenue target for the year.
  2. Enter the billable hours realistically available.
  3. Enter your actual realization and collection rates.
  4. Compare the required rate against the rate at full realization.

What people use this for

  • Setting a rate for a new practice from an income requirement.
  • Testing whether a target is achievable at rates the market accepts.
  • Quantifying the cost of weak collection in rate terms.
  • Deciding whether to raise rates or improve billing discipline.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

A solo target

$240,000 on 1,150 billable hours at 92% realization and 95% collection.

Required rate
$238.78
Added by leakage
$30.08
Rate if nothing were lost
$208.70

The same target with weaker collection

Realization at 84% and collection at 88%.

Required rate
$282.33
Added by leakage
$73.63
Overall yield
73.9%

The two answers, and the gap between them

With nothing lost, a $240,000 target on 1,150 hours needs about $209 an hour. At 84% realization and 88% collection it needs about $283 - seventy-four dollars an hour added to every bill purely to cover leakage.

That gap is the strongest available argument for billing discipline, because it converts an administrative problem into a number every practitioner understands immediately.

Hours available is the input people overstate

A solo practitioner does their own administration, business development, billing and collection. The hours genuinely available to bill are considerably fewer than the hours worked, and a target built on the latter is a target that will not be met.

Use what your time records show over a full quarter rather than what a week feels like. The difference is routinely twenty percent.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

  • The yield factor is realization × collection. The required rate is the target ÷ (hours × yield factor).
  • The rate at full realization divides the target by hours alone; the difference is the leakage premium.
  • This is arithmetic about pricing and says nothing about what any market will accept.
  • The tool performs arithmetic or date counting on the values you enter. It does not interpret a rule, a statute or a contract.
  • Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This website provides general informational and productivity tools and does not provide legal advice or create an attorney-client relationship.

The date and deadline tools count days exactly as you instruct them. They do not interpret court rules, statutes of limitation, filing requirements or any other legal authority, and they do not know the rules of your jurisdiction.

Always verify any date, fee, or calculation against the governing rule, the court calendar and your own professional judgement. If you need legal advice, consult a lawyer licensed in your jurisdiction.

Frequently asked questions

Is this rate what I should charge?

It is the rate the target requires on your assumptions. Whether the market will pay it is a separate question.

What if the required rate is above the market?

Then something has to change: a lower target, more billable hours, better collection, or a different mix of work. The last of those is frequently the real answer.

Should the target be revenue or income?

Revenue. Income depends on costs, which this does not model - use a practice revenue calculator for that.

How do fixed fees fit in?

Convert them to an implied hourly figure across the hours they consume, and include both in the totals.

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