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Blended hourly rate: how to calculate it and when to quote one

The formula, a worked example, why a simple average overcharges, what a change in staffing does to your margin, and wording for the quote.

Last updated November 6, 2026

A blended hourly rate is one rate charged for everyone on a job, whatever their grade. To calculate it, multiply each person's expected hours by their normal rate, add the results and divide by the total hours. Quote one when you control the staffing mix and the client wants a simple bill.

How do you calculate a blended hourly rate?

A blended hourly rate is the total value of the planned hours at normal rates, divided by the total hours. Here's an invented example of a firm planning a 120-hour job:

Grade Hours Normal rate Value
Partner 20 €200 €4,000
Senior 60 €120 €7,200
Junior 40 €70 €2,800
Total 120 €14,000

€14,000 ÷ 120 hours = €116.67 an hour. Round that to a figure you can quote. At €117, the job bills €14,040, which is €40 more than the separate rates would have come to.

The normal rates come from your own charge-out rate for each grade. If you haven't worked those out, start there.

Why not just average the rates?

A simple average ignores who does the hours, and that's the mistake to avoid. The average of these three rates is (€200 + €120 + €70) ÷ 3 = €130. At €130, the same job bills €15,600, which is €1,600 more than the separate rates. The client would be paying for partner time they aren't getting.

The error runs the other way when senior people do most of the work. Always weight by hours.

What happens when the staffing mix changes?

A blended rate is a bet that the staffing mix will hold, because the client's bill stays the same whoever does the work. This is the same invented job, always 120 hours at €117, so always €14,040 billed. The firm's own cost per hour is €110 for a partner, €65 for a senior and €40 for a junior.

Partner / senior / junior hours Value at normal rates Billed against normal rates Cost to the firm Margin
20 / 60 / 40, as planned €14,000 +€40 €7,700 45.2%
40 / 50 / 30, partner-heavy €16,100 −€2,060 €8,850 37.0%
10 / 50 / 60, junior-heavy €12,200 +€1,840 €6,750 51.9%

The partner-heavy row is the usual risk. A difficult client or a tricky job pulls in senior time, and the firm absorbs it. The junior-heavy row looks good for the firm until the client notices who turned up, and then wants to know why they're paying €117 for it.

So the mix needs watching even though the invoice doesn't show it. The guide to project profitability by person covers how to see it.

When should you quote a blended rate?

Quote a blended rate when you choose who does the work and that mix is unlikely to move much.

Situation Blended rate? Why
You pick the team, and the mix is stable Yes You carry a risk you can control
The client wants one simple rate on the invoice Yes It removes arguments about who did what
Long-running support with a steady team Often The mix evens out over time
The client wants to choose or approve each person No They're buying individuals, so price individuals
The scope is unclear and senior time could balloon Only with a review point Otherwise the overrun is all yours
Nearly all the work is one grade No need It's just that grade's rate
The scope is well defined Consider a fixed fee See lump sum vs hourly

Blended rates come up most in legal services, consulting and marketing agencies, where mixed teams bill by the hour. For a comparison with retainers, see consultant hourly vs retainer billing.

How do you write a blended rate into a quote?

State the rate, the assumption behind it, and what happens if that assumption stops being true.

We will charge a blended rate of €117 per hour, plus VAT, for all team members on this project. The rate assumes about 120 hours in total, with the team mix set out in our plan. If the hours or the mix look likely to change materially, we will tell you before that work begins and agree any new rate in writing.

The invoice line then needs only the work, the period and the arithmetic:

Project team, 1 to 30 April 2026: 38.50 hours at €117.00 per hour.

Billing a blended rate in ERPFlow

ERPFlow doesn't calculate a blended rate, and projects have no rates of their own. Create one service, such as "Project team, per hour", with the blended rate as its unit price. You can also store your own hourly cost in its Cost price field, which customers never see. Put that service on the quote, convert the quote to an invoice, and type the hours as the quantity.

A single rate suits how ERPFlow counts time. A card's Time spent adds up per project, and one figure per project is all you need to cross-check a blended invoice. ERPFlow doesn't have a timer or timesheets today, and that time doesn't become invoice lines. Time tracking, including converting tracked time into invoices, is coming soon.

There are no per-person time reports, per-project costing or profitability, so the check on your staffing mix stays in a spreadsheet.

FAQ

Blended rates: common questions

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What is the difference between a blended rate and an average rate?
A blended rate is weighted by hours, and a simple average isn't. A team with rates of €200, €120 and €70 averages €130, but if the cheaper people do most of the hours, the true blended rate is lower. Using the simple average overcharges the client or, when senior people do most of the work, undercharges.
Is a blended rate cheaper for the client?
Not necessarily. A blended rate set correctly costs about the same as separate rates if the team works as planned. It costs the client less if senior people do more of the hours, and more if junior people do.
Should I tell the client who is working on a blended-rate job?
Yes. A client paying one rate for everyone still expects to know who the team is, and an unexplained change towards junior staff is a common source of complaint. Name the team or the mix in the quote, and tell the client if it changes materially.
How often should a blended rate be reviewed?
At every new engagement, and at agreed points on a long one. A blended rate depends on the staffing mix and on your underlying rates, and both move over time. A long engagement should say when the rate gets reviewed, for example after a set number of hours.
Does ERPFlow calculate a blended hourly rate?
No. ERPFlow has no rates on projects and no per-person time reports, so the staffing mix behind a blended rate is worked out outside it. Once you have the figure, it can be stored as the price of a service and used on quotes and invoices.

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