Free expense ratio checker
Your rate was built on an expenses assumption. When you set it — in the rate calculator — your target income and your annual expenses were added together and grossed up, which means the rate only works if the real year still spends roughly what the rate assumed it would. This page checks that: your real business expenses as a share of the revenue you actually invoiced, read against the assumption inside your rate. On the defaults below — $84,000 invoiced, $12,600 of expenses, a 15% assumption — the real ratio is exactly 15.0% and the gap is zero: the in-line case, shown first so the reading is clear. It is not the tax set-aside calculator, which plans one line — the tax share — and not the break-even clients calculator, which counts the roster. This one audits the whole cost base against the price built to carry it.
Your year, as it really ran
The breakdown — optional, and it rules
Fill in any of these four lines and the breakdown becomes the record: if the lines add up to something different from the total above, this page uses the lines and says so in the results, because itemised records beat a remembered total. Leave them all empty and the typed total stands.
Use a finished year if you have one, or the last twelve months if you don’t. The check is about the shape of the business, not about a calendar.
Your expense ratio
Enter your revenue, your real expenses and the assumption inside your rate.
| Revenue invoiced | — |
| Expenses counted | — |
| Which figure was used | — |
| Assumption inside your rate | — |
| Real expense ratio | — |
| Gap vs the assumption | — |
| What the gap is worth a year | — |
| The gap as a rate figure | — |
| Biggest breakdown line | — |
Enter your year and this line reads the verdict back to you — in line, drifting, running lean, or underpriced by structure.
Worked example
A freelancer whose year invoiced $84,000 — a realistic, not-quite-full year at their rate — and whose business spent $12,600 across software, gear, workspace and services. Their rate was built believing expenses ran at 15% of revenue. Enter those numbers above and the checker returns exactly this:
| Revenue invoiced | $84,000.00 |
| Expenses counted | $12,600.00 |
| Assumption inside the rate | 15% |
| Real expense ratio | 15.0% |
| Gap vs the assumption | +0.0 percentage points |
| What the gap is worth a year | $0.00 |
| The gap as a rate figure | $0.00 an hour at 1,152 billable hours |
The defaults are the calm case on purpose: a rate whose assumption still holds. Now change one thing — revenue of $70,000 against expenses of $16,800 — and the same page reads a ratio of 24.0%, a gap of +9.0 points, worth $6,300 a year: $5.47 an hour at 1,152 billable hours that the rate never charged for. Same effort, same hours, same skill — the shortfall is not in the work, it is in the assumption the price was built on. That is the reading this page exists to produce, and it is why the verdict for a gap that size names the rate, not the freelancer.
How the number works
- The assumption is already inside your rate. The hourly rate calculator builds your number by adding the income you need and the expenses you expect, then grossing the total up for tax and margin. Your expenses are therefore not a detail beside the rate — they are a load-bearing part of it. If the real share of revenue your costs consume rises above the share the rate assumed, every hour you sell quietly under-recovers, and no invoice ever shows it. This check exists to make that one comparison, assumption against reality, once a year at least.
- Expenses creep by subscription, not by decision. Almost nobody sits down and chooses a more expensive business. The ratio rises a few dollars at a time: a tool added for one project and never cancelled, a storage tier, a second seat, an insurance renewal at a higher premium. Each arrival is too small to argue with, which is precisely why the total needs a scheduled reading rather than a feeling. The ratio is a quarterly review number — small enough to check in minutes, structural enough that catching it a year late is expensive. Its biggest single ingredient deserves its own audit: the subscription cost auditor itemises the tool stack line by line — every subscription normalised to one month, annual bills divided by twelve — and names the biggest line, which is where a creeping ratio usually starts.
- Fixed-ish costs and variable-ish costs fail differently. Subscriptions, rent and insurance are fixed-ish: they do not shrink in a quiet month, which is why they belong in the monthly burn the runway calculator divides your cash by — a high fixed share shortens the runway and lengthens the panic. Gear is variable-ish and lumpy: a camera body or a laptop lands in one year and serves three, so judge those lines across two or three years before concluding anything. This page reads the year you give it; the smoothing judgement is yours, and the method here is to separate the one-offs before reading the verdict.
- A gap has three honest responses. Cut: audit the lines — the biggest line named in the results is where the money is, and a subscription audit is the cheapest rate rise there is. Price: fold the real expense figure into the rate at the next review, rebuilding the number in the rate calculator with the truth in it, and carry it to existing clients the way the guide to raising your rates sets out. Or mix: sometimes the business changed shape — retainers carry a different cost base from projects, a new service line carries new tools — and the client list audit shows which clients the new costs arrived with. What is not on the list is the fourth response most solos actually choose: work more hours at the old rate to fund a cost base the rate never priced.
- There is no universal healthy ratio, and this page refuses to invent one. A photographer’s gear-heavy year and a writer’s near-zero-cost year can both be perfectly healthy; a percentage that is lean for one trade is impossible for another, which is why the profession pages on this site itemise each trade’s own costs — the rates by profession show what a cost base like yours is expected to carry. The only benchmark that means anything is the assumption inside your own rate. Beat it and you have margin you priced for and didn’t spend; miss it and the price, not the effort, needs the attention.
- The denominator is invoiced revenue, before tax. Not profit — dividing by what is left after expenses would count the same costs twice and the figure would stop describing the business. Not receipts either: invoices sent are the year’s true size, including the ones still being chased. And not a tax figure of any kind. The tax share of your income is a different share, with its own percentage and its own pot, and the tax set-aside calculator is where it is planned — keep the two ratios apart, because they answer different questions and fail in different ways.
Read it beside its neighbours. The tax set-aside calculator plans the one expense-like line this page deliberately leaves out. The break-even calculator divides a month’s full costs by your fee to count the work that covers them — the same costs, read forward instead of back. And when the verdict here says the structure is the problem, the rate calculator is where the rebuilt number comes from, with the real expense figure typed in this time. The same cost total also has a date: the break-even day calculator sets it as a line against the year’s invoiced income and returns the working day the income crosses it — this page reads the costs as a share, that one reads them as a calendar.