Fresh Projects is a UK-based software platform designed for architects, engineers, and other built-environment professionals to manage financial aspects of their projects. It helps teams track fees, timesheets, expenses, billing, and overall profitability to keep projects on budget and profitable. The platform also centralises project data, streamlines administrative tasks, and offers mobile app support for easy access and updates.
1a Colinette Road
London
SW15 6QG
© 2026 Fresh Projects
Product
Fresh Projects is a UK-based software platform designed for architects, engineers, and other built-environment professionals to manage financial aspects of their projects. It helps teams track fees, timesheets, expenses, billing, and overall profitability to keep projects on budget and profitable. The platform also centralises project data, streamlines administrative tasks, and offers mobile app support for easy access and updates.
1a Colinette Road
London
SW15 6QG
© 2026 Fresh Projects
Product
Calculate Your Cost Rate in 3 Simple Steps
Calculate Your Cost Rate in 3 Simple Steps
Calculate Your Cost Rate in 3 Simple Steps
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Through years of working closely with architects and practice leaders on financial management, I have seen the same issue come up time and again. Given a simple set of financial and timesheet data, most people struggle to calculate a true cost rate on the first attempt. Not because the maths is difficult, but because cost rates are rarely explained properly.
Cost rates sit underneath almost every commercial decision a practice makes. They affect how you price work, how you resource projects, when you hire and whether you are actually making money.
In this article, I will show you how to calculate your true cost rate using four key numbers and a few simple illustrations.
Step 1: Determine your practice overheads
To establish your true cost rate, you first need to understand how your practice’s total costs are structured.
This should be done over a meaningful period, typically the last 12 months, to smooth out seasonality and one-off fluctuations.
1.1 Split your costs into four buckets
Start by grouping all practice costs into the following categories:
Direct project costs
Costs that can be directly attributed to a specific project, such as sub-consultants, models, surveys and specialist reportsAdmin and support staff salaries
Staff who do not work directly on projects, such as finance, HR, office management and adminTechnical staff salaries
Staff who work directly on delivering projects, including architects, engineers and technical project staffEverything else
Overheads such as rent, IT, software licences, insurance, legal fees and professional subscriptions
1.2 Calculate your Technical Salary Percentage
Direct project costs should be excluded from this calculation. These costs are directly attributable to projects and should ideally be reimbursed by clients wherever possible.
Once direct project costs are removed, calculate your Technical Salary Percentage.
Technical Salary Percentage = Technical Staff Salaries ÷ Total Costs (excluding direct project costs)
The closer this figure is to 100 percent, the more of your cost base is made up of fee-earning staff.
Example
Direct project costs: £2,000
Overheads: £5,000
Admin salaries: £3,000
Technical salaries: £10,000
Technical Salary Percentage
= £10,000 ÷ (£10,000 + £3,000 + £5,000)
= 55 percent
Typical ranges
Micro practice (1–3 staff): 75–90 percent
Small practice (5–20 staff): 60–70 percent
Medium practice (20–50 staff): 50–60 percent
Large practice (50+ staff): below 50 percent
As practices grow, overheads and support costs increase. This makes utilisation increasingly important.
Step 2: Determine each employee’s utilisation percentage
The second major driver of cost rate is utilisation.
Ideally, this should be calculated using historic timesheet data over at least a year to account for seasonality. If timesheets are not available, estimates may be used, but accuracy will be reduced.
For each employee:
Utilisation Percentage = Project Time ÷ Total Time Recorded (including overtime)
Project time should include both fee-earning work and bid or competition work.
Example
Richard
Project time: 1,500 hours
Non-project time: 600 hours
Utilisation
= 1,500 ÷ (1,500 + 600)
= 71 percent
Zaha
Project time: 1,800 hours
Non-project time: 900 hours
Utilisation
= 1,800 ÷ (1,800 + 900)
= 66 percent
Non-project time includes holidays, admin, meetings, training and marketing.
Typical utilisation ranges
Junior and production staff: 80–90 percent
Team leaders: 70–80 percent
Owners and directors: 50–60 percent
Step 3: Put it all together
Once you have calculated both Technical Salary Percentage and Utilisation Percentage, you can calculate the true cost rate for each employee.
Cost Rate = Total Salary ÷ Contract Hours ÷ Utilisation Percentage ÷ Technical Salary Percentage
Where:
Total Salary includes all employment costs and benefits
Contract Hours is the total number of paid hours per year
Utilisation Percentage comes from Step 2
Technical Salary Percentage comes from Step 1
Example
Richard’s total cost to the practice is £30,000 per year. He works 8 hours per day, 5 days per week.
Contract hours per year: 2,080
Utilisation: 71 percent
Technical Salary Percentage: 55 percent
Cost Rate
= £30,000 ÷ 2,080 ÷ 0.71 ÷ 0.55
= £37 per hour
= £295 per day
This is the number your project fees must cover if the practice is to remain profitable.
How to improve profitability without cutting salaries
Cost rates increase for two main reasons:
Low utilisation
High overheads relative to technical salaries
You can improve profitability without reducing pay or expecting unpaid overtime by focusing on these two levers.
Increase the proportion of time staff spend on project work by removing unnecessary admin
Keep overheads and non-fee-earning costs under control
The goal is simple. You want as much of your cost base as possible working directly on projects.
Why this matters
Understanding cost rates is not an academic exercise.
It underpins:
Fee setting
Resourcing decisions
Hiring
Long-term profitability
Practices that understand their true cost rates make calmer, more confident decisions. Practices that do not often discover problems too late.
Through years of working closely with architects and practice leaders on financial management, I have seen the same issue come up time and again. Given a simple set of financial and timesheet data, most people struggle to calculate a true cost rate on the first attempt. Not because the maths is difficult, but because cost rates are rarely explained properly.
Cost rates sit underneath almost every commercial decision a practice makes. They affect how you price work, how you resource projects, when you hire and whether you are actually making money.
In this article, I will show you how to calculate your true cost rate using four key numbers and a few simple illustrations.
Step 1: Determine your practice overheads
To establish your true cost rate, you first need to understand how your practice’s total costs are structured.
This should be done over a meaningful period, typically the last 12 months, to smooth out seasonality and one-off fluctuations.
1.1 Split your costs into four buckets
Start by grouping all practice costs into the following categories:
Direct project costs
Costs that can be directly attributed to a specific project, such as sub-consultants, models, surveys and specialist reportsAdmin and support staff salaries
Staff who do not work directly on projects, such as finance, HR, office management and adminTechnical staff salaries
Staff who work directly on delivering projects, including architects, engineers and technical project staffEverything else
Overheads such as rent, IT, software licences, insurance, legal fees and professional subscriptions
1.2 Calculate your Technical Salary Percentage
Direct project costs should be excluded from this calculation. These costs are directly attributable to projects and should ideally be reimbursed by clients wherever possible.
Once direct project costs are removed, calculate your Technical Salary Percentage.
Technical Salary Percentage = Technical Staff Salaries ÷ Total Costs (excluding direct project costs)
The closer this figure is to 100 percent, the more of your cost base is made up of fee-earning staff.
Example
Direct project costs: £2,000
Overheads: £5,000
Admin salaries: £3,000
Technical salaries: £10,000
Technical Salary Percentage
= £10,000 ÷ (£10,000 + £3,000 + £5,000)
= 55 percent
Typical ranges
Micro practice (1–3 staff): 75–90 percent
Small practice (5–20 staff): 60–70 percent
Medium practice (20–50 staff): 50–60 percent
Large practice (50+ staff): below 50 percent
As practices grow, overheads and support costs increase. This makes utilisation increasingly important.
Step 2: Determine each employee’s utilisation percentage
The second major driver of cost rate is utilisation.
Ideally, this should be calculated using historic timesheet data over at least a year to account for seasonality. If timesheets are not available, estimates may be used, but accuracy will be reduced.
For each employee:
Utilisation Percentage = Project Time ÷ Total Time Recorded (including overtime)
Project time should include both fee-earning work and bid or competition work.
Example
Richard
Project time: 1,500 hours
Non-project time: 600 hours
Utilisation
= 1,500 ÷ (1,500 + 600)
= 71 percent
Zaha
Project time: 1,800 hours
Non-project time: 900 hours
Utilisation
= 1,800 ÷ (1,800 + 900)
= 66 percent
Non-project time includes holidays, admin, meetings, training and marketing.
Typical utilisation ranges
Junior and production staff: 80–90 percent
Team leaders: 70–80 percent
Owners and directors: 50–60 percent
Step 3: Put it all together
Once you have calculated both Technical Salary Percentage and Utilisation Percentage, you can calculate the true cost rate for each employee.
Cost Rate = Total Salary ÷ Contract Hours ÷ Utilisation Percentage ÷ Technical Salary Percentage
Where:
Total Salary includes all employment costs and benefits
Contract Hours is the total number of paid hours per year
Utilisation Percentage comes from Step 2
Technical Salary Percentage comes from Step 1
Example
Richard’s total cost to the practice is £30,000 per year. He works 8 hours per day, 5 days per week.
Contract hours per year: 2,080
Utilisation: 71 percent
Technical Salary Percentage: 55 percent
Cost Rate
= £30,000 ÷ 2,080 ÷ 0.71 ÷ 0.55
= £37 per hour
= £295 per day
This is the number your project fees must cover if the practice is to remain profitable.
How to improve profitability without cutting salaries
Cost rates increase for two main reasons:
Low utilisation
High overheads relative to technical salaries
You can improve profitability without reducing pay or expecting unpaid overtime by focusing on these two levers.
Increase the proportion of time staff spend on project work by removing unnecessary admin
Keep overheads and non-fee-earning costs under control
The goal is simple. You want as much of your cost base as possible working directly on projects.
Why this matters
Understanding cost rates is not an academic exercise.
It underpins:
Fee setting
Resourcing decisions
Hiring
Long-term profitability
Practices that understand their true cost rates make calmer, more confident decisions. Practices that do not often discover problems too late.
Published:
Published:
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Fresh Projects is a UK-based software platform designed for architects, engineers, and other built-environment professionals to manage financial aspects of their projects. It helps teams track fees, timesheets, expenses, billing, and overall profitability to keep projects on budget and profitable. The platform also centralises project data, streamlines administrative tasks, and offers mobile app support for easy access and updates.
1a Colinette Road
London
SW15 6QG
© 2026 Fresh Projects
Product
