The hourly cost rate is important in the calculation of the costs of your projects, clients or tasks.
When you set a cost rate for your team members, Time Analytics automatically multiples the tracked hours by team members with set cost rates and allocates total costs to your projects, clients and tasks.
This is how to set an hourly cost rate in a few steps:
- Click the “Team” button in the main menu
- Click “Edit” for a specific team member from the list
- Fill in the hourly cost rate and save
How to calculate the cost rate
You can enter either the hourly pay rate of a team member or the total cost rate which is the pay rate plus the hourly rate of overhead costs.
For more precise cost allocation, we suggest using the total cost rate (further: cost rate)
Time Analytics suggests the following formula:
Cost rate = Pay rate + Overhead rate. As previously said, instead of the cost rate you can enter only the pay rate.
The pay rate is usually agreed with the employee by a labor contract, eg. $20/hour. Otherwise, you can calculate this by dividing the monthly gross salary by the typical number of monthly work hours. For example if the monthly gross salary is $3,520 and the average monthly working hours is 176, then the pay rate would be $20/hour.
The overhead rate represents overhead costs allocated per employee. For example, if the monthly overhead costs amount to $10.000 and the total average work hours for all employees amount to 1000 per month, the overhead rate is $10. Accordingly, the total cost rate is $20 + $10 = $30.
Overhead costs are usually costs that are not directly related to projects such as office rent, administration and general costs, etc.
An example of a best-estimated calculation (download table with formulas in excel).
The hourly rate can be changed at any time, but frequent changes are not recommended.
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