Fixed-Fee Matter Profitability Calculator
Calculate the true profit, margin, and effective hourly rate of a fixed-fee matter — then estimate what you should charge for a similar matter next time.
Runs locally in your browser · No signup
Matter Details
Avoid entering confidential client information.
Team & Time
Enter the actual hours worked on this matter and each person's internal cost per hour.
Use your estimated internal hourly cost, not the rate billed to the client.
Other Costs
Direct costs actually borne by the firm on this matter, such as filing fees, courier, contract attorney, travel or research services.
No other costs added.
Profitability Review
No matter data yet.
Enter a fixed fee and actual matter costs to review profitability.
Next Matter Pricing
If a similar matter costs about the same, this is the fee that would reach your target profit margin.
Allowed range: 0–90%.
Calculated target-margin fee: total matter cost ÷ (1 − target margin). It is a mathematical estimate, not market pricing.
What is matter profitability?
Matter profitability is the difference between the fixed fee a law firm collects and the real cost of delivering the matter: the hours worked by each team member valued at their internal cost per hour, plus direct costs the firm actually bears. Many fixed-fee practices know what they billed but not what a matter actually earned. A simple profitability review shows the true profit, the profit margin, and the effective hourly rate of the matter — the starting point for better fixed-fee pricing in solo practices and small law firms.
How to calculate profit on a fixed-fee matter
Add up each team member’s hours multiplied by their internal cost per hour to get the labor cost — use internal cost, not the rate billed to the client. Add any direct costs the firm bore on the matter, such as filing fees it absorbed, courier, contract attorney, travel, or research services. Total matter cost is labor cost plus other costs; matter profit is the fixed fee minus total cost, and the profit margin is profit divided by the fixed fee. Enter these figures in the calculator and it produces the full review, including a cost breakdown showing labor, other costs, and profit as a share of the fee.
What is effective hourly rate for a fixed-fee matter?
The effective hourly rate of a fixed-fee matter is the fixed fee divided by the total hours the team actually worked — a revenue-based measure of what each hour of work earned. It is different from profit per hour, which divides matter profit by total hours. If a $3,500 matter took 17.5 total team hours, the effective hourly rate is $200/hour, even if part of that revenue was consumed by labor and other costs. Comparing the effective hourly rate with your internal cost per hour is a quick way to see whether a fixed fee is working for the firm.
How to price the next similar matter
If the next similar matter will cost about the same to deliver, the fee that reaches a target profit margin is: total matter cost ÷ (1 − target margin). A matter that cost $2,200 to deliver needs a fee of about $3,143 to reach a 30% margin. This is a mathematical estimate based on this matter’s actual costs — not market data — so treat it as a starting point for your quote rather than a recommended price.
Example fixed-fee matter profitability review
Example: a firm handles a standard business formation for a fixed fee of $3,500. The partner works 3 hours at an internal cost of $160/hour, an associate 8 hours at $80, and a paralegal 4 hours at $40, giving a labor cost of $1,280 over 15 total hours. The firm also absorbs $300 of filing and admin costs. Total matter cost is $1,580, so matter profit is $1,920 — a 54.9% margin — and the effective hourly rate is $233.33/hour. At a 30% target margin, a similar matter with the same cost would need a calculated target-margin fee of about $2,257. Click Try Example in the workspace above to load this exact matter.