Calculate project profitability

To see whether a project is profitable, make sure everyone has both rates, get the time approved, then open the project’s Overview → Financials panel. This page walks the whole thing through on one project.

What you need first

Profitability needs four things. Miss any one and the numbers are wrong rather than missing.

A billing rate on everyone who works the project

Without one, their hours earn nothing and margin looks terrible. See billable rates.

A cost rate on everyone who works the project

Without one, their hours cost nothing and margin looks great. This is the most common cause of a wrong number. See cost rates.

Time tracked against the project

Hours are the raw material. Both figures are rate × hours.

Time approved

Cost and revenue only count once a reviewer approves the time. Unapproved time sits outside the figures.

A project budget is not required to see profitability. It is required to see utilisation, health and alerts.

The walkthrough

Bluebird Coffee – Website Redesign. Sold at $40,000. Estimated at 400 hours.

Step 1 – Check the rates

Person	Billable rate	Cost rate
Sarah Lin	$100/hour	$45/hour
Jonas Bergman	$120/hour	$60/hour
Ana Ferreira	$80/hour	$55/hour

All three have both rates. Good.

Step 2 – Check the approved hours

Person	Approved hours
Sarah Lin	150
Jonas Bergman	50
Ana Ferreira	50
Total	250

Step 3 – Work out revenue

Revenue is billing rate × hours, per person.

Person	Calculation	Revenue
Sarah Lin	150 × $100	$15,000
Jonas Bergman	50 × $120	$6,000
Ana Ferreira	50 × $80	$4,000
Total		$25,000

Step 4 – Work out cost

Cost is cost rate × hours, per person.

Person	Calculation	Cost
Sarah Lin	150 × $45	$6,750
Jonas Bergman	50 × $60	$3,000
Ana Ferreira	50 × $55	$2,750
Total		$12,500

Step 5 – Work out margin

margin = $25,000 − $12,500 = $12,500
margin % = $12,500 ÷ $25,000 × 100 = 50%

The project is running at a 50% gross margin.

Step 6 – Work out where it is heading

The forecast projects the remaining estimated work at the same rates.

remaining hours = 400 − 250 = 150
forecast cost = $12,500 + 150 × $45 = $12,500 + $6,750 = $19,250
forecast revenue = $25,000 + 150 × $100 = $25,000 + $15,000 = $40,000
forecast margin = $40,000 − $19,250 = $20,750

Forecast margin percentage:

20,750 ÷

40,000 × 100 = 51.875%. The project is on course to finish at

40,000 of revenue – exactly what it was sold for – costing

19,250 and keeping $20,750.

Step 7 – Check it against the budget

utilisation % = $12,500 ÷ $40,000 × 100 = 31.25%
completion % = 250 ÷ 400 × 100 = 62.5%

The project has used under a third of its budget and delivered nearly two thirds of the estimated work. Spend is trailing progress by 31 points, which is healthy. The bar reads 31% spent · 63% complete, and the health chip reads On track.

Reading the Financials panel

Everything above appears on the project’s Overview.

Element	Value in this example
Health chip	On track
Budget bar caption	`31% spent · 63% complete`
Forecast at completion tile	$40,000 /$ 19,250
Forecast margin tile	The projected margin at completion
Gross profit tile	$12,500
Effective hourly rate tile	$100.00

Effective hourly rate check:

25,000 ÷ 250 hours =

100.00 exactly. The Forecast at completion tile shows revenue first, then cost after a slash. Someone without cost visibility sees only the revenue half, and the two cost tiles are not rendered at all.

Comparing projects

To rank projects by profitability, build a report on the Profitability source.

Create a report

Go to Reports and start a new report on the Profitability source.

Group by project

Or by client, to see which relationships pay best.

Add the measures

Billable value for revenue, Actual cost, Gross profit and Margin %.

Set the date range

A quarter is usually the right window. Too short and one big invoice distorts it.

Save it

Save the report so the same view is one click away each month.

The cost and profit measures require time.viewCost. Someone without it can still build the report but sees only the revenue columns. See build a report and metrics reference.

A worked warning – what wrong numbers look like

Suppose Ana Ferreira had no cost rate.

Person	Hours	Revenue	Cost
Sarah Lin	150	$15,000	$6,750
Jonas Bergman	50	$6,000	$3,000
Ana Ferreira	50	$4,000	$0
Total	250	$25,000	$9,750

Margin would read

25,000 −

9,750 = $15,250, which is 61% – a full 11 points better than the truth. Nothing warns you. The number is wrong, and it stays wrong on every report that reads it.

The single biggest risk to a profitability number is a missing cost rate. Check every person on the project has one before you trust the margin – especially contractors, who are often added in a hurry.

Common causes of a wrong figure

Symptom	Likely cause
Margin is unrealistically high	Someone has no cost rate
Margin is unrealistically low	Someone has no billing rate, or lots of hours are non-billable
Cost and revenue are both zero	No time has been approved
Margin dropped sharply after approvals	Correct – approval adds real cost that was previously excluded
Two projects with the same team show different margins	Different billable rates, or a different mix of who did the hours
Effective hourly rate is far below your headline rates	Non-billable hours, or cheaper people doing most of the work

Permissions

Action	Capability	Roles
See revenue and billable value	– (workspace member)	Any member
See cost, gross profit and margin	`time.viewCost` or `rate.viewCost`	Owner, Admin
See a person’s cost rate	`rate.viewCost`	Owner, Admin
Set a cost rate	`rate.manage` + Pro `profitability`	Owner, Admin, Project Manager on Pro
Set a project budget	`budget.manage` + Pro `budgets`	Owner, Admin, Project Manager on Pro
Approve the time that feeds the figures	`time.approve` + Pro `approvals`	Owner, Admin, Project Manager on Pro

Common questions

Do I need a budget to see profitability?

No. Margin comes from rates and hours. A budget adds utilisation, health and alerts on top.

Can I see profitability across a whole client?

Yes. The client detail page rolls up its projects. A project in a different currency is counted separately rather than summed into a mismatched total.

How often should I check?

Weekly on live projects, and always before you quote a similar job. A project you only check at the end is a project you can only learn from, not steer.

Why does a fixed-fee project show revenue above the fee?

Revenue is billable value – hours at their rates. On a fixed-fee job that figure can exceed the fee, and when it does, you are delivering more work than you sold. Compare it against the budget.

Should I include non-billable hours?

They are already included, on the cost side. That is what makes the number honest.

What if a person's rate changed mid-project?

Each time entry snapshots the rates in force when it was recorded, so historical entries keep their original figures. See rate snapshots.

Troubleshooting

Problem	Cause and fix
No Financials panel at all	The Budgets app is off, or the project has no budget and no approved time.
Cost tiles missing	You lack `time.viewCost` and `rate.viewCost`.
Utilisation is 0% but people are working	The time is not approved yet, on a money budget.
Forecast equals actuals	No task on the project has an estimate, so there are no remaining hours to project.
Client roll-up flags mismatched currencies	One of the client’s projects uses a different currency. It is counted, not silently summed.
Report shows revenue but no cost columns	The cost measures need `time.viewCost`.

Profitability and margin

The concept, explained from first principles.

How budgets work

Utilisation, forecast and health.

Cost rates

The input most often missing.

Rate snapshots

Why old entries keep their old rates.

Build a report

Comparing profitability across projects.

Project profitability

The same figures from the project’s point of view.

​What you need first

​The walkthrough

​Step 1 – Check the rates

​Step 2 – Check the approved hours

​Step 3 – Work out revenue

​Step 4 – Work out cost

​Step 5 – Work out margin

​Step 6 – Work out where it is heading

​Step 7 – Check it against the budget

​Reading the Financials panel

​Comparing projects

​A worked warning – what wrong numbers look like

​Common causes of a wrong figure

​Permissions

​Common questions

​Troubleshooting

​Related guides

Profitability and margin

How budgets work

Cost rates

Rate snapshots

Build a report

Project profitability

What you need first

The walkthrough

Step 1 – Check the rates

Step 2 – Check the approved hours

Step 3 – Work out revenue

Step 4 – Work out cost

Step 5 – Work out margin

Step 6 – Work out where it is heading

Step 7 – Check it against the budget

Reading the Financials panel

Comparing projects

A worked warning – what wrong numbers look like

Common causes of a wrong figure

Permissions

Common questions

Troubleshooting

Related guides