A cost rate tells Productive what an hour of someone's work costs your company. Productive uses it to work out what your budgets cost and how profitable they are. Here's how it works and where to go for each task.
What Are Cost Rates?
A cost rate is what you pay someone for their time, usually their salary. You enter it the way you pay it: per year, month, two weeks, week, or hour.
Productive then works out what one hour costs. For a salary, it divides the amount by the working hours in that period, leaving out public holidays. For example, a $60,000 yearly salary comes out to $29.07 an hour.
You need a cost rate for anyone who tracks time or gets booked for services on budgets or deals in the Resource Planner, such as Employees and Contractors, so their hours and costs count. You can add one for a placeholder too, to forecast their workload and costs.
Why Do Cost Rates Matter?
A cost rate does two things:
It sets the person's capacity, which is the hours they're expected to work. The capacity indicators in the Resource Planner are tied to this, helping you plan work.
It gives the person an hourly cost. Productive multiplies it by the hours they track or are scheduled for, which gives the cost on services in your budgets and deals.
That cost is what profit is measured against. Profit is revenue minus cost.
đ Without a cost rate, a person can't track time or request time off. You can still add budget or deal bookings for them, but those bookings will be saved as 0hrs/$0 cost.
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Add a cost rate for a person | |
Change a rate after a raise, fix dates, or delete a rate | |
Set up a bi-weekly schedule, such as 40/32-hour weeks | |
Add equipment or office costs to hourly cost | |
Use different rates on one budget or deal | |
Understand how hourly cost is calculated |