In Productive, hourly costs are calculated based on the actual working capacity for the full period of the cost rate — whether that's a week, two weeks, a month, or a year.
This matters because working hours can vary due to differences in period length, starting days, and public holidays.
👉 Find out more about setting up cost rates in this article.
How Does the Calculation Work?
For employees with "fixed" cost types (weekly, bi-weekly, monthly, or annual), Productive divides their total cost by the working capacity for the full period — always snapped to the start of that period, never just from the cost rate's start date.
Productive uses the exact number of working hours in that period, so public holidays and non-working days are factored in, and no simplified assumptions are made (like "4 weeks per month").
The period depends on the cost rate type:
Cost rate type | Hourly cost is based on |
Weekly | Working hours in that full calendar week (Mon–Sun) |
Bi-weekly | Working hours in that full 2-week block |
Monthly | Working hours in that full calendar month |
Annual | Working hours in that full calendar year |
Why the Capacity Shown on the Cost Rate Might Look Different
The capacity shown on the cost rate screen reflects only the hours from the cost rate's start date to the end of that cost-rate period (for example, the end of the year, month, week, or two-week period, depending on the cost rate type). This partial capacity is shown for display purposes only.
Productive always calculates hourly cost using the full period's working hours — from the start of the period, not the start of the cost rate. For a monthly salary, that's the whole calendar month. For an annual salary, that's the whole calendar year.
Why? Using partial capacity would produce misleadingly high hourly rates for cost rates that start mid-period. For example, if an annual salary of $60,000 starts on December 15th, the remaining capacity would be around 30 hours, making the hourly cost appear as $2,000/hr, which doesn't reflect the actual cost of that person's work.
📌 Example
An employee has a $60,000 annual salary starting April 1st. The cost rate screen shows a capacity of 1,552 hours (April → end of year). You might expect:
$60,000 ÷ 1,552h = $38.66/hr
But Productive uses the full calendar year capacity of 2,064 hours, so the correct hourly cost is:
$60,000 ÷ 2,064h = $29.07/hr
Why Hourly Cost Doesn’t Change During Time Off
Hourly cost does not increase when an employee takes vacation or other personal time off. Productive calculates hourly cost from the employee’s capacity for the cost-rate period, and time off reduces availability, not capacity.
📌 Example
An employee with a $60,000 annual salary and a full-year capacity of 2,064 hours has an hourly cost of:
$60,000 ÷ 2,064h = $29.07/hr.
Even if they take three weeks of vacation, the hourly cost remains $29.07/hr.
👉 Learn more about the difference between capacity and availability here.
Viewing Hourly Cost Changes
To see how hourly costs change over time:
Go to the employee's profile in Productive (Resourcing > Employees).
Open the Cost Rates tab.
Review the historical data in the expandable table, which shows how hourly rates have fluctuated based on monthly variations in working capacity.
This table is especially useful for monitoring trends and making informed financial decisions.
