You may have noticed the ‘Profit & Loss’ box in the top-right corner of every project in Teamleader. Say hello to the profit margin functionality! We’ve written this article to introduce you to this feature: what does it do and how does it work?
What does it do?
The profit margin 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 margin calculates and lets you know in a visually insightful way what costs you have made versus the revenue created. The green bar indicates your revenue, the red one your costs. The darker shade of green (or red) indicates the margin between the two, the percentage of which is added at the bottom of the box.
For a detailed overview of your margins, click the ‘View details’ button on top. 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 margin was calculated.
How does it work?
Adding hourly rates
The first thing to do to start using profit margin 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 margins on your projects when timetracking is added. If timetracking is marked as invoiceable, the margin between internal cost and external price is added to your revenue. If timetracking is non-billable, costs will increase, but revenue 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 margin (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 margin widget:
External costs and additional products
Of course, profit margin 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 margin calculated if you invoice your milestones for a fixed price?
In that case, tracked time and materials do not influence your revenue (which is the amount of your fixed price). However, costs are still affected by timetracking because work costs money, regardless of your invoicing method.
If you have more questions about profit margin, 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.