Profit per Hour Calculator

Profit per hour measures how much actual profit a business generates for each hour of operation or labor invested.
It is more useful than revenue because it counts what stays in the business rather than what passes through it, and because it exposes the efficiency problems a growing top line hides.

The formulas: Hourly Revenue = Total Revenue / Hours Worked Hourly Profit = Net Profit / Hours Worked Profit Margin = (Net Profit / Revenue) × 100

Where Net Profit = Revenue − All Costs (materials, labor, overhead, marketing, etc.)

Worked example, a freelance designer: Monthly revenue: $8,500 Costs: Software $120, advertising $200, subcontractor $800, tools $150 = $1,270 Net Profit = $8,500 − $1,270 = $7,230 Hours worked: 160 hours (40 hrs/week × 4 weeks) Profit per hour = $7,230 / 160 = $45.19/hour

Worked example, a small retail shop: Monthly revenue: $42,000 Costs: Inventory $18,000, rent $3,500, staff $9,000, utilities $600, misc $900 = $32,000 Net Profit = $42,000 − $32,000 = $10,000 Hours open: 10 hrs/day × 26 days = 260 hours Profit per hour = $10,000 / 260 = $38.46/hour

Why this metric matters: A business clearing $200,000 a year sounds like a success until you find the owner works 80-hour weeks for it. That is $48/hour before personal taxes.
A business clearing $80,000 on 35-hour weeks earns $44/hour, four dollars less, with 45 hours a week back. Put like that, most people would take the second one.

Compare your profit per hour against two things: what your last job actually paid per hour, and the legal minimum wage where you live. Owners who have never done that comparison are often unpleasantly surprised, and it is better to be surprised on a spreadsheet than four years in.

One caveat on where the owner’s pay sits. If you pay yourself a salary and it is inside your costs, this figure is profit on top of your wages. If you do not, it is your wages. Those are very different numbers and the calculator cannot tell which you have entered, so decide before you read the result.