When I ask architects in a workshop "how much does your hour cost?", 80% answer a round number: R$ 80, R$ 100, R$ 150. When I ask how you arrived at that number, the silence is awkward. The truth is that most chose the value by feel, comparing with a colleague, remembering a talk, deciding it seemed fair.
The problem is that the billable hour rate is not an opinion. It's an accounting equation that defines whether or not your firm will turn a profit. And it's more brutal than it looks: a R$ 20 error in the hour, multiplied by 140 project hours, becomes R$ 2,800 of silent loss per contract.
Why the billable hour rate is the most ignored metric in the firm
The billable hour rate works like the "unit cost" of a factory. Before deciding the selling price of the product, the industry needs to know how much it costs to manufacture it. In an architecture firm, the "product" is an hour of qualified work, and almost no one calculates that cost properly.
The consequence shows up in three classic symptoms:
- The firm bills revenue, but the partner doesn't draw a consistent salary. A sign that the owner's pay isn't built into the hour.
- A "profitable" project at signing turns into a "break-even" project on the income statement. A sign that fixed cost wasn't allocated.
- You work 60 hours a week and still can't afford paid time off. A sign that the billable hours were overestimated.
The billable hour rate is the point where your cost structure meets your selling price. If it's wrong, the rest of the budget is wrong too, regardless of which pricing model you use (R$/m², per deliverable or per hour).
The 4 mistakes that sabotage the calculation
Mistake 1: Using 176h/month as billable hours
This is the most common mistake. 176h is the total of workable hours in the month (8h × 22 business days). But you don't bill 176h. You bill the hours that actually deliver a project to the client. The rest is sales, management, finance, email, internal meetings, hours lost to rework, vacation, holidays. In a healthy firm, billable hours fall between 55% and 70% of workable hours. Calculating with 176h artificially inflates the denominator and drives down the billable hour rate.
Mistake 2: Forgetting the owner's pay (or setting a "starvation" pay)
A partner who works on the project costs money. If you're the senior architect and get hands-on in 60% of the deliverables, your owner's pay is labor cost, not "profit". Build in the pay you want to draw (not the one you're settling for) into the calculation. Profit comes later, separately.
Mistake 3: Not accounting for taxes on revenue
Simples Nacional charges between 6% and 15.5% on revenue across most of the brackets where firms operate. This tax comes out of the selling price, not out of your profit. If you don't build it in, it eats into your margin.
Mistake 4: Treating everyone in the firm with the same hourly rate
Intern, junior, mid-level, senior and partner have different billable hour rates. If your spreadsheet says "firm hour = R$ 100", you're charging the same for a R$ 35 hour (intern) and a R$ 220 hour (senior partner). The error only turns into profit when the partner does little execution, otherwise you're giving away expensive hours for free.
Billable hour rate calculated automatically
Limify reads your fixed cost, distributes it per team member, factors in realistic idle time and calculates the billable hour rate for each level of the firm. You enter it once and the platform protects the margin of all your proposals.
Try it freeThe complete formula, no shortcuts
Forget the IAB table and the simplified formula. If you want a billable hour rate that reflects the reality of your firm, you need four variables:
Billable hour rate = (Monthly fixed cost + Owner's pay + Expected taxes) ÷ (Billable hours in the month × Idle-time factor) × (1 + Target margin)
Let me break down each term:
- Monthly fixed cost: rent, software, accountant, marketing, energy, internet, non-partner team salaries (with payroll charges), office supplies. Everything you pay regardless of having a project.
- Owner's pay: the amount each partner needs to draw per month, defined before the calculation, not after. If there are two partners and each needs R$ 8,000, that's R$ 16,000 monthly.
- Expected taxes: calculate your effective Simples rate on expected revenue and add it to the total. If you bill R$ 50k/month and are in the 11% bracket, that's R$ 5,500.
- Billable hours: the team's time that will be charged directly to the client. Don't count sales, management or rework hours. I'll explain how to measure this below.
- Idle-time factor: between 0.55 and 0.75 depending on the firm's maturity. Beginner = 0.55. Mature = 0.70.
- Target margin: the profit you want after paying everyone. I recommend between 25% and 40%.
How to measure billable hours for real
Take a team of 4 people working 8h/day × 22 days = 704 workable hours in the month. From those, subtract:
- Management and finance hours (~10%)
- Internal meetings, email, alignment (~12%)
- Sales and prospecting (~8%)
- Rework and unbilled revisions (~6%)
- Proportional vacation (~9%)
That leaves about 55% for billable delivery in a young firm. In a firm with mature processes, 70% is left. Use that number, not 100%.
Step-by-step example (a real firm)
A firm with two partners + two junior team members. Let's calculate the average billable hour rate.
Monthly fixed cost:
| Item | Value |
|---|---|
| Rent + building fees | R$ 3,200 |
| 2 juniors' salaries + payroll charges | R$ 11,800 |
| Software + subscriptions | R$ 1,400 |
| Accountant | R$ 800 |
| Marketing + sales | R$ 2,000 |
| Energy, internet, misc. | R$ 1,300 |
| Total fixed cost | R$ 20,500 |
Owner's pay: two partners × R$ 9,000 = R$ 18,000.
Expected taxes: estimated revenue of R$ 60,000/month, effective rate of 12% = R$ 7,200.
Total cost to cover: 20,500 + 18,000 + 7,200 = R$ 45,700/month.
Billable hours:
- 4 people × 176h = 704 workable hours
- Healthy idle-time factor: 0.62 (intermediate firm)
- Effective billable hours: 704 × 0.62 = 437h
Break-even billable hour rate (no margin):
R$ 45,700 ÷ 437h = R$ 104.57/hour. This is the point where the firm pays the bills, pays the partners, pays the taxes and breaks even. It's the absolute floor.
Billable hour rate with a 30% target margin:
R$ 104.57 × 1.30 = R$ 135.94/hour. This is the number you charge. The extra 30% is the profit that funds growth, vacation, reserves and investment.
Billable hour rate table by firm size (reference)
The values below are a reference based on Brazilian firms with a healthy structure. Use them as a benchmark, but never skip calculating your own real hour rate. Local reality, rent and salary costs vary too much between regions.
| Size | Structure | Billable hour rate |
|---|---|---|
| Solo (freelancer) | 1 partner, no team | R$ 110 – 160 |
| Small | 1–2 partners + 1–3 team members | R$ 130 – 190 |
| Medium | 2–3 partners + 4–8 team members | R$ 160 – 240 |
| Large | 3+ partners + consolidated team | R$ 200 – 320 |
This range assumes a firm with a 30% target margin built in. If your real hour rate is below the floor of your size bracket, it's because either your fixed cost is off-standard (subsidized rent, low investment) or your margin is too tight.
How to use this on your next proposal
A calculated billable hour rate serves three practical purposes:
- Estimate the cost of any project. If you know that a 180m² residential project consumes 130h of the team, it costs R$ 13,594 in labor alone (130 × 135.94). That's the floor of the composition.
- Check whether R$/m² is consistent. If you charge R$ 90/m² on a 180m² project, that's R$ 16,200. You're left with R$ 2,606 over the direct cost, tight if you still have fixed cost to cover on this project. A sign that the R$/m² table needs reviewing.
- Justify the value to the client. When the client asks "why so expensive?", you open the spreadsheet and show: 130h of technical team × the firm's real hour rate. It's not an opinion, it's math.
And most important: recalculate every three months. Fixed cost changes, salary changes, tax changes. A January billable hour rate is probably wrong by July.
Next article in the series: Architecture fee table: what to charge in 2026, a comparison between IAB, R$/m² and cost per deliverable, with real market ranges.