How does Operating decide the cost rate?
How Operating resolves the internal cost rate for each Person on a Position — checking from the most specific source down to a site-based default, in a fixed order.
Written By Lauri Eurén
Last updated 18 days ago
A cost rate is what one hour of a Person's work costs your company. Operating uses it to calculate the cost, gross profit and margin of each Position and Project. For the rate you charge clients, see How does Operating decide which rate to use?
A cost rate can come from three places:
The Person's own cost rate, set on their profile.
A cost card, which sets a cost for each combination of Site, Role and seniority. Cost cards are used for in-house people and for Positions that have no Person yet.
Your default costs: one for in-house people and one for externals, such as contractors and freelancers.
When more than one of these is set, Operating uses the most specific one, in the order below. Two exceptions are described after it.
The order Operating checks
For an assigned Position, Operating resolves the cost rate in this order (with two exceptions listed below) and stops at the first match.
The Person's individual cost rate. A cost set on the Person's profile (under Employment) is used first.
Otherwise, by Person type:
In-house: the cost card for the Site, Role, and seniority the Person had on the date of the work. If no cost card covers that combination, your default cost applies.
External: your default external cost. Externals do not use cost cards.
For an unassigned Position — a Role with no Person yet — Operating uses the cost card for the Position's own Role, seniority, and Site, falling back to the default cost.
Exceptions
Two cases skip the order above:
A project cost for an external. When an external is assigned to a Position, you can turn on Override cost in the Cost part of the Position form and enter a cost for that Position. That cost is used for the external's work on that Position only. Their work on other Positions and Projects follows the order above.
Imported costs. A time entry that an integration imports with its own cost keeps that cost.
Costs are site-specific
Cost cards are set per Site, because labor cost varies by location: the same Role at the same seniority can cost more in one Site than another. You set the defaults and cost cards in Settings, under Financials.
When a Person moves to another Site, work before the move uses the old Site's cost card and work from the move onward uses the new one. See "Site changes over time" in Sites.
A Site can also cap costs at a person's working hours, so unpaid overtime adds no cost — see How cost capping works.
Per hour, week, or month
A cost can be entered as an hourly, weekly, or monthly figure. Operating converts week- and month-based costs into an hourly cost by spreading them across working days, so every cost compares on the same basis.
Who can see cost rates
Cost rates, and the margins built from them, are permission-gated — with separate permissions to view and to edit costs. A Person without the view-cost permission won't see cost rates or per-position margin.
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