Overhead cost per hour is the amount Productive adds to each hour your team tracks, to cover the cost of running your organization. It has two parts: the Facility cost per hour and the Internal cost per hour.
Facility costs, like rent, are shared across all hours. Internal costs, like internal time, expenses, and absences, are shared across client hours. Add the two parts together and you get the overhead cost per hour.
You'll find the result in two places. Projection for current month is an estimate based on averages. Overhead history is calculated from what was tracked in each past month.
Calculating Overhead Cost per Hour
Overhead has two parts, and each is spread across a different set of hours. The difference comes down to who should carry which cost.
1) Facility Cost per Hour
Facility costs ÷ total hours
Facility costs, like rent and software, are used by everyone, whatever they're working on. So Productive spreads them across all hours: client hours, internal hours, and paid time off.
For example, $10,000 in facility costs across 1,000 total hours is $10 per hour.
2) Internal Cost per Hour
Internal costs ÷ client hours
Internal costs pay for the work that supports your client work, such as sales, finance, and admin. That work isn't billed to clients, but it's paid for by the hours that are. So Productive spreads its cost across client hours only.
For example, $18,000 in internal costs across 600 client hours is $30 per hour.
3) Overhead Cost per Hour
Add the two values together:
Facility cost per hour + Internal cost per hour = Overhead cost per hour
In this example, $10 + $30 gives an overhead cost per hour of $40.
What Goes Into Each Number
Overhead uses data you already enter in Productive: time tracking, expense tracking, and time-off bookings.
Click a month name in the Overhead history table to open a panel with the breakdown. Each component described below has a toggle, so you can leave it out and recalculate.
👉 Learn how in Review and Adjust Overhead Cost by Month.
Facility Cost
A lump sum for each month. It covers day-to-day running costs, such as office space, utility bills, and equipment.
Each month keeps its own facility cost. A new month takes it from the Facility cost default setting when the month is created.
Internal Cost
The sum of:
Time cost: Cost of hours tracked on internal budgets
Expense cost: Cost of expenses tracked on internal budgets
Absence cost: Cost of paid time-off bookings for all people
Cost of hours over availability: Cost of hours worked beyond availability (capacity minus paid leave). This reduces the internal cost total
Cost of hours under availability: Cost of hours under availability (capacity minus paid leave)
👉 Learn how capacity and availability work in Capacity and Availability: Everything You Need to Know.
How Hours Over Availability Reduce Overhead
When Cost of hours over availability is turned on and someone works more than their availability, the extra cost is subtracted from the internal cost total. This stops overtime from being counted twice.
Take a person on a fixed salary of $1,600 who works 160 hours a month. Each hour costs $10.
They track 200 hours, so they have 40 hours over availability
The extra cost is 40 × $10 = $400
Productive shows it as -$400 in the internal cost
Hours
Total hours: All time tracked on client and internal budgets, plus paid time off
Capacity: Expected worked hours from each person's cost rate. Only fixed cost rates count (weekly, bi-weekly, monthly, annual), not hourly ones
Client hours: Time tracked on client budgets
Internal overhead hours: Time tracked on internal budgets
Absence overhead hours: Time booked as paid time off
📌 Client hours, internal hours, and absence hours only include people with overhead turned on.
How Averaging Works
The current month isn't over yet, so Productive can't calculate its overhead from complete numbers. Instead, it estimates Projection for current month from your past months.
The Averaging period setting decides how many by default. To use a different number for the current month, change it in that month's panel.
What Gets Averaged
What Gets Averaged
Productive averages these over your averaging period:
Internal costs
Total hours
Client hours
Internal overhead hours
Absence overhead hours
For example, with an averaging period of 3 months, the projection uses the average of the last 3 months.
What Doesn't Get Averaged
What Doesn't Get Averaged
The month's own facility cost is used as it is. A new month takes it from the Facility cost default setting when it's created, and changing the setting later doesn't affect existing months.
The projection also ignores whether a component was turned on or off in past months. It averages as if every component had been turned on.
What About Past Months?
What About Past Months?
Months in Overhead history aren't averaged. They're calculated from what was tracked in that month.
What You Can Do
Pick a longer averaging period to even out busy and quiet months
Pick a shorter one to follow recent changes faster
👉 Learn how to change it for a single month in Review and Adjust Overhead Cost by Month.
If the Number Looks Off
Higher than expected:
Check your facility cost and internal costs
Check that client hours are fully tracked, since fewer client hours raise the internal cost per hour
Open the month and check which components are turned on, including the two availability ones
Lower than expected:
Check that no component was turned off in the month's panel
Check that client and total hours include everyone with overhead turned on
Open the month and check which components are turned on, including the two availability ones
$0.00:
No hours: Check that hours are tracked for the period by people with overhead turned on
No costs: Check that the month has a facility cost or internal costs
Overhead per Subsidiary
If you use a per-subsidiary calculation type, the same formulas apply to each subsidiary separately.
👉 Learn more in Overhead Cost per Subsidiary.
