In ClickTime, the Cost Rate is the approximate hourly cost of paying your employees. This is set on the Person Details page.
When used in tandem with Billing Rates, ClickTime can assist with the estimated profitability of the services/etc. that your team provides to your customers. For more details on Billing Rates, please see the Billing Rate Overview Guide.
Please be aware that while ClickTime data can be helpful in creating invoices and payslips, the Cost Rate and Billing Rate reports are provided for estimation purposes only.
When a new employee is added to the system, the Cost Rate field will automatically be populated with whatever the Default Cost Rate is. This is set on the Company --> Preferences page and can be changed at any time:
When a new employee is added to the system, you will have the option to change their Cost Rate by simply adding a new rate during the setup process:
Whatever is saved at this time will be the Person's Cost Rate for all of their time entries.
If you are not sure how to calculate a Cost Rate, ClickTime offers a function to help you calculate this number:
In this example, we have an employee who makes $60,000 a year with an expected work-week of 40 hours a week. This employee will likely earn a 10% bonus throughout the year ($6,000), and the cost of overhead (which can include payroll taxes, benefits paid for the employee, office expenses, and more) is estimated to be about 30% of their salary. Given these factors, ClickTime estimates the hourly cost of staffing this employee to be $40.38
It's generally difficult to predict exactly how much an employee will earn from bonuses, or what their overhead is exactly, and we also understand that some work weeks fluctuate, which is why we provide an approximate Hourly Cost for estimation purposes.
Cost Rates are similar to Billing Rates in that each time entry someone makes includes a built-in Cost Rate. Whatever that person's Cost Rate is when they last save the time entry will be hard-coded to that time entry. We can see this in our reporting tools - here is an example from the Customizable Data Export:
It's assumed that Cost Rates will change periodically, which you can do at any time on the Person Details page by simply editing the Cost Rate field, entering the new value, and saving. All time entries saved after that change is made will be coded with the new Cost Rate.
In some situations, you may need to apply the new Cost Rates to time entries that already exist in the system. ClickTime allows you to do this for time entries that are part of an "open", "waiting for approval", or "rejected" timesheet. To do so, go to edit the Cost Rate and then indicate you'd like to "Apply the cost rate to all new and existing unlocked time as far back as..." by checking the box and selecting a date.
When you click "Update", you'll see a pop-up window asking you to confirm that you'd like to apply these changes back to the date you specified.
Changing Cost Rates for existing time entries can take up to 5 minutes (but will typically not take more than a minute or two, depending on how many entries are being changed). Click "Save and Continue" to confirm you'd like to change existing Cost Rates for the dates specified.
Please note: The change will only be applied to time entries that belong to unlocked/unapproved timesheets. If you wish to change the Cost Rate for time entries for a locked/approved timesheet, please first un-lock or undo approval of the timesheet. You can also reject the timesheet, although that will generate an email to the employee. After the changes have been applied, you can re-lock/re-approve the timesheets.
After confirming the changes, you'll see an icon in the top-right corner next to your name letting you know the system is changing Cost Rates.
When it is finished the message will disappear and you'll see confirmation that the details have changed for that employee. For best results, please allow this process to finish before moving on to change any other Cost Rates.
When Cost Rates are changed, you should be able to confirm these changes took place by re-running any reports that include Cost Rate data.
In order to use reports in ClickTime that include "Profitability", you must have accurate Billing Rates and Cost Rates in the system. Here is the "Profitability Summary" report (available in the Project section of the Company --> Reports page):
ClickTime calculates Profitability by subtracting Total Cost from the Billable Amount. This is determined using the following formula:
- Billable Amount = Billing Rate of time entries multipled by the number of hours in the report criteria
- Total Cost = Cost Rate of employee multiplied by the number of hours worked by the employee
As mentioned earlier, Cost Rate is the approximate Hourly Cost, so while ClickTime data can populate invoices / payslips, this information is for estimation purposes only.