You may have noticed when you open a project, you have three columns right underneath the company details: Budget Spent, Profit (and loss) and Time Tracked. In this article we will introduce you to the Profit on projects feature.
What does it do?
The profit function in Teamleader will help you get a clear view of how profitable your projects actually are. You may have tons of unbilled timetracking waiting to be invoiced, but if your costs exceed your profits, you’re not exactly giving your business the opportunity to grow.
Profit calculates what costs you have made versus the billable amount created. A distinction is made between costs and billable amount. Costs equal the time tracked and materials used multiplied by the cost price. Billable amount refers to billable time and materials used multiplied by the sales price. Fixed price milestones are immediately added to the billable amount.
You made profit? Great! The profit will be indicated in green:
Loss will be indicated in red:
For a detailed overview of your profit, click on the ‘Details’ button in the right upper corner. You’ll be led to the ‘Profitability details’ page. Profits and costs per milestone will appear. Click a milestone for an overview of tracked time within the milestone. Clicking the timetracking itself, you’ll see how the profit was calculated.
How does it work?
Adding hourly rates
The first thing to do to start using profit efficiently is to add an internal cost and an external price for users in your account. Internal cost refers to how much a co-worker costs per hour internally, as opposed to the hourly rate at which you will invoice the client, which is the external price. To add these:
Navigate to Settings > HR.
Note that you need admin rights in your account to be able to define the internal cost per user.
Click the pencil to the right of the user.
To the left of the overview you will find the fields ‘Internal cost’ and ‘External price’.
Based on these hourly rates, Teamleader will calculate the profit on your projects when timetracking is added. If timetracking is marked as billable, the margin between internal cost and external price is added to your billable amount. If timetracking is non-billable, costs will increase, but the profit will not. After all, working hours will cost you money, even if they are not invoiced.
We imagine not every user in your account should necessarily have access to profit (we’re thinking temporary users, for example). While you’re on the user page in the HR-settings, take a look at the project settings. There’s a slider here to determine whether or not a user has access to the profit on projects widget:
External costs and additional products
Of course, profit does not just depend on time spent working. You may already know you can add external costs to a project. Click the link to find out more if you haven’t. For now, suffice to say these allow you to keep track of any additional purchases you have to make during a project. You can also add products when tracking time, which will be added to your invoice automatically if your milestone is set to time & material.
If you’ve added external costs (or added products when timetracking) that do not have a linked purchase price, the Profit & Loss box will display the following message:
What about milestones set to ‘Fixed price’?
The former situation assumes your milestones are set to ‘time and material’. But how is the profit calculated if you invoice your milestones for a fixed price?
In that case, fixed price milestones are immediately added to the billable amount of your profit.
Tracked time and materials do not influence your billable amount (which is the amount of your fixed price). However they do influence your costs:
- Timetracking: Costs are still affected by timetracking because work costs money, regardless of your invoicing method. The internal cost of the user(s) that tracked time will thus be added to your costs.
- Materials: Costs are still affected by the purchase price of the products you added. The sum of the purchase prices of your products (at least if they were all filled out) will be added to your costs.
If you have more questions about profit on projects, or anything else for that matter, contact our support team by clicking the question mark in the top-right corner of your account and click ‘Support’ to submit your question.