Enter your assumptions
How it is calculated
Available hours = staff count × annual hours per person. Billable hours = available hours × utilization rate. Labor revenue = billable hours × realized billing rate. Estimated operating profit = labor revenue − annual operating costs. Estimated margin = estimated operating profit ÷ labor revenue.
This estimate omits nonlabor revenue, write-offs, billing mix, taxes, financing, and accounting treatment. It is general education only, not engineering, legal, tax, or investment advice. Licensed PE judgment and local codes govern engineering work.
Example scenario
A hypothetical civil engineering firm owner enters 5 billable staff, 2,000 available hours per person, 80% utilization, a $100 per hour realized billing rate, and $700,000 in annual operating costs. The calculator reports 8,000 billable hours, $800,000 in labor revenue, $100,000 in estimated operating profit, and a 12.5% margin. These are hypothetical operating inputs, not industry benchmarks or a forecast. The result can help the owner discuss whether staffing capacity and realized rates appear to cover the costs included in the calculation. Before making a hiring, pricing, or budget decision, check the firm’s actual utilization and collected rates, confirm which costs are included, and account for nonlabor revenue, write-offs, taxes, financing, and accounting treatment. Compare the estimate with the firm’s books and project records.
Method, inputs and limits
Purpose
Estimate labor revenue and operating profit from staff capacity, utilization, billing rate, and costs.
Inputs and defaults
Billable staff: 10 people; available hours: 1,800 per person per year; utilization: 70%; average realized billing rate: $150/hour; annual operating costs: $1,500,000. Counts and dollars must be nonnegative; utilization must be 0 to 100%.
Formulas
Available hours = staff × hours per person. Billable hours = available hours × utilization. Labor revenue = billable hours × realized rate. Estimated operating profit = labor revenue − operating costs. Margin = profit ÷ labor revenue, when revenue is above zero.
Outputs
Billable hours, labor revenue, estimated operating profit, and margin.
Test cases, expected values
- Defaults: 12,600 billable hours; $1,890,000 revenue; $390,000 operating profit; 20.6% margin.
- 5 staff, 2,000 hours, 80%, $100/hour, $700,000 costs: 8,000 billable hours; $800,000 revenue; $100,000 profit; 12.5% margin.
- 0 staff, 1,800 hours, 70%, $150/hour, $100,000 costs: $0 revenue; −$100,000 profit; margin unavailable.
Disclaimer
Estimate only. Omits nonlabor revenue, write-offs, taxes, financing, and accounting details. General education, not professional advice. Licensed PE judgment and local codes govern engineering work.
