Your Team Members play a vital role in growing your business—and they deserve to be paid for all that hard work! But when it comes to profitability, labor cost is also one of the biggest components of a project’s expenses to consider. And without knowing precisely how much you need to bill your clients to remain profitable, you’re bound to mismanage project spending and leave money on the table.
To help maximize your profitability, FreshBooks lets you set Team Cost Rates and Billable Rates.
This gives you more control over your profit margins, so you can make more informed decisions and grow your business faster.
Team Cost Rates are how much you pay your Team Members, while Billable Rates are how much you charge clients for their work. Setting these rates helps you better manage profitability on projects by balancing the money you spend against the money you make.
Team Cost Rates can be set for all Team Member roles. Once set, a Team Cost Rate will be used globally for all projects. And if you need to update it? The new rate will be applied to future projects.
To set your Team Cost Rates, either:
The easiest way to calculate how much a Team Member costs your business per hour, is to add their gross annual pay, related expenses, and overhead, then divide by however many billable hours they work each year.
Here’s an example of one way to make that calculation:
Because it’s impossible to bill for every hour of every day, it’s important to divide by billable hours to ensure healthy margins that will absorb any kind of downtime (admin, commuting, work shortages, etc).
Your Billable Rate allows you to apply a unique rate for yourself, Admins, Managers, Employees and Contractors on all time entries in your account.
Simple! To add or edit Billable Rates:
Setting Team Cost Rates and Billable Rates puts you in control of your numbers and helps maximize project profitability by allowing you to:
If you have any questions about Team Cost Rates or Billable Rates, a team of Support Rockstars is ready to help you out. Contact them here.