You are Losing Money – Part II – Calculating cost rates and billable rates

When it comes to budget control management software, you want answers to the following questions:

  • What is my fully loaded cost per resource?
  • What should be my billable rate?
  • How much do I make per project?
  • How do I ensure I do not run over budget?

We have already provided the components forming your fully loaded cost (FLC). Now find here few tips how to connect all these parameters and calculate your FLC.

  • You want to ultimately come to the cost per hour or day for your resources. To achieve this you need to get the cost per month divided by workdays.
  • Workdays vary by country and industry so get the right number. If you do not know it there are plenty of such calendars in the internet so ask Google.
  • Extract vacations and sick days and you will come to the actual workdays of your employees. Then divide this number by 12 to get the actual workdays per month.
  • Normally salaries vary based on seniority. If possible organize your resources in tiers based on seniority in order to have few lines of FLC for your resources. Otherwise could become a very long list of people, and believe me, this will be a nightmare to make any sense of.
  • Get the average amount per month considering total pay for the year including bonus.
  • Take into account social and health insurance per resource.
  • Consider any release costs and add it to the estimated amount per month.
  • Do not forget to estimate recruitment costs for your employees, especially if you use external provider that charges you a flat fee. Alternatively count the time that your employees spend to interview candidates until you select one e.g. one out five candidates make it and it takes you two hours each, then consider 10 hours of cost (if non-billable) or billable rate for this person.
  • Same for HR and admin services – consider the time spent on payroll, evaluations etc.
  • Take your rent and divide it by the people. If your employee number changes, just calculate your cost per sq.m and consider that on average you need to have around 5 sq.m. per person.
  • Extract training costs per resource. Normally this is budgeted per unit so should be easy to plug into your formula.
  • Account for equipment and furniture – laptops, monitors, adapters, desks, chairs.

Once you have extracted all costs and know the actual workdays, a simple division will give you the cost per day, and a further division by working hours e.g. 8 h a day, the FLC hourly rate.

Now, how to calculate the billable rate?

Well, obviously you cannot bill less than FLC but there are actually more costs to consider like management salaries, marketing, cost of sales etc. This is then cost plus pricing. But this is a truly complex topic and it should be defined based on your company strategy, target industry, product etc. In any case, it is generally not a good idea to price under your cost. 🙂

Stay tuned – in our next article next week we will address the last set of questions and namely:

  • How much do I make per project?
  • How do I ensure I do not run over budget?

The Cronforce.com Team

Amazing 2015. 2016 is going to be even better.

2016 rolled out and we’re hoping you had a great celebration and set your minds on the goals you want to achieve throughout the year!

For us, the New Year celebration put an end to a crazy 2015. Cronforce’s last 12 months were a real rollercoaster of emotions, events and achievements. Luckily, with your help and appreciation of our business software, the rollercoaster ended at a high point. With that, we’re ready to tackle an even better-looking 2016!

Let’s get a brief overview of what happened. We know it might seem dull to you, but we gauged what worked (and how it worked) for us, so last year’s trends are the basis of what you’re going to receive from us over this new year.

Expanding our portfolio to meet the needs you have

Cronforce started humbly, with a pack of well-tested functionalities. It was meant as a steady, reliable tool for tackling common project management issues. We had a MVP, we developed it as a core, and took it from there. You helped us refine and expand its functions later on.

Throughout the last years many projects managers and teams messaged us that a budget-related feature would complement Cronforce’s existing portfolio. So we worked on one and added the Finance module with its advanced budgeting, project costs overview and many other integral functions for a business of any size.

If you haven’t checked it out already, get your financial groove on and test it now!

Sailing the 3rd party integration seas with success

You also nodded towards our beneficial 3rd party integrations, mentioning how that made us shine in comparison with other business management solutions. That’s why we went further and added an award-winning Jira integration with the core of our project management software.

We like to believe it was yet another reason for the prestigious FinancesOnline awarding us with a Great User Experience badge.

As Jira is getting the industry favorite, we feel it will continue to gain traction as one of our most important 3rd party integrations. Why not give it a spin and tell us what you think of it?

Project management and time tracking with Jira

 

The social side of it all

We know everyone is so keen on social media right now, but we did some precious offline networking too. (Not only with our project management clients, we can be fun too, you know!)

Going back and forth, we ended up attending as much as 30 events. From industry-related happenings to events focused on startups or general tech, we gained important insight. It sure helped us re-imagine some Cronforce features for the better.

As it was our second Cronforce year, it was pretty spectacular to be able to connect with so many people! We also got to conclude some crucial partnerships that kickstarted a promising new 2016.

 

But if you really want to know about the social media side of things…Well, we tweeted a great deal of almost 1 200 tweets. What’s more important, close to 2 700 people on Twitter and the same amount of similarly thinking sidekicks decided to give us a like on Facebook. It’s a great result so we’re looking forward to taking our social media communication to the next level.

Best of all, we started producing more content on our blog. Seems like you like it, as we had some heartwarming thumbs up for that on our email!

Looking to the future with more project management in mind

2015 feels like a warm-up practice. We learned our lessons and you helped us throughout the process. We have just started giving back to you – and shaping Cronforce as the power business management software we want to see it develop as.

Thank you for being around over the last year. 2016 will be even crazier and we guarantee that you and your teams will love it. Stick with us and let’s reimagine how intelligent project management looks like. It’ll be beautiful.

The Cronforce.com Team