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Understanding and Setting Up Cost Rates in Productive
Understanding and Setting Up Cost Rates in Productive

Learn to effectively manage and set up cost rates in Productive for precise financial tracking and budgeting.

Updated over a week ago

What Are Cost Rates?

Cost rates assign a value to the time spent on tasks or services, reflecting the cost of an employee's or contractor's work.

In other words, they represent the costs that your agency pays to individual employees, such as their salary.

Why Are Cost Rates Important?

Besides the salary information, cost rates are essential in Productive for accurate time tracking, budgeting, scheduling, billing clients, and assessing project profitability.

Without defined user cost rates, time cannot be tracked against tasks, services, or deals, and people cannot be booked for services in Resourcing. The financial information you add to each employee's profile dictates how much their hour of work costs your company, which is also factored in when calculating your profitability.

It is essential to set up cost rates for any people who need to track time or be booked for services or deals in Resourcing, such as Employees and Contractors. You can set up cost rates for your placeholder users as well, to help you forecast their utilization and costs.

Setting Up Cost Rates

Adding a Cost Rate for an Employee or Contractor

You will be prompted to set up a user's cost rate when inviting them to Productive, but if you skipped this, no worries, here's how to set everything up:

  1. Go to Contacts (or Settings > Users) and select the employee or contractor (paid seats; people who are expected to log time and work in Productive).

  2. Navigate to their Cost rate tab and click on the + Cost rate button.

  3. Choose the cost rate type: annual, monthly, bi-weekly, weekly, or hourly. Enter the amount, select the currency, and define the number of work hours per day.

    Tip: You can schedule an additional cost rate to begin in the future. For example, set one cost rate to start today and end in three months, and another to start after three months. This is useful if you anticipate an employee getting a raise or having changes in their work schedule.


  4. After adjusting all the information, select "Create cost rate" in the bottom left.

    After saving, the user's Cost rate tab will contain the information you provided, complete with the calculation of their current hourly cost and their capacity for their current month.


Holiday Calendars

Assign holiday calendars on a per-person basis for different holidays and non-working days based on the employee's location. This is especially useful for remote teams working from different countries.

The holiday calendar you choose will automatically mark bank holidays for this person in Resourcing, the Workload view, the user's Time tab, and the person will not be expected to work on those days, which affects their capacity. For more information on capacity and availability, check out this article.

Overheads

Overheads are additional costs per employee, such as equipment or office space. If you have overhead costs for an employee, leave the overhead checkbox checked. This will add a fraction of your total overhead cost to each hour logged by the user.

For contractors who usually don't have overhead costs, you can uncheck this option.

Updating or Deleting Cost Rates

Viewing User Details

You can get detailed activity reports for users, including work logs, time entries, and projects, on their personal profile pages. To find a specific user:

  • Go to CRM > Contacts > filter your company, Settings > Users, or My company > People tab.

From the user’s profile page, you can:

  • View an overview of their utilization.

  • Access their work log, time entries, and project assignments.

  • Manage their cost rates from their Cost rates tab.

To update or delete a cost rate, scroll down to the list of the user's cost rates and click on the three-dot menu next to the rate or select + Cost rate in the upper right.

Important to Note: Date Information

Ensure correct start and end dates for cost rates to reflect raises or changes accurately.

If any mistakes occur, you can amend them by merging undefined cost rates with the next cost rate in line.

Custom Cost Rates on Budgets and Deals

After configuring default cost rates for your employees and contractors, you can further enhance financial tracking by defining custom cost rates for individual budgets or deals.

This feature, available in the Ultimate plan, allows for varying cost rates for different individuals within a specific budget, offering flexibility in monitoring overall costs.

Learn more about it here.

Payroll Report

The payroll report provides a detailed overview of your employees' cost rates, showing monthly rates, cost rate types, and start and end dates. To create a payroll report:

  • Go to Reports and create a new report From scratch (open the dropdown menu next to the +Report button to find the "From scratch" option)

  • Select the Payroll data source. This is only visible to Admins.

  • Customize the report with filters, fields, and charts.

Checking if All Employees Have Their Cost Rates Set Up

To verify that all employees have their cost rates set up, check the Capacity column in the Time report from the Report templates (navigate to the Reports tab and click + Report).

If the column shows zero hours, it means the user's cost rates still need to be defined.

Watch the Video

For a more detailed walkthrough, watch the video tutorial.

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