You can't improve what you don’t measure. Track how many billable and non-billable hours were spent on a project. A top-down view of your projects helps you make an informed decision on eliminating projects that are not profitable for your business. This gives you the focus to work on your most profitable projects.
Listing projects that are profitable will help you steer away from future similar projects or clients. If the project is ongoing, you can end the project sooner or negotiate a higher billable rate. In case the client does not want to negotiate try to set up new tasks with a higher billable rate and focus on those.
Analyze your projects to determine the best billable methods and rates for your future projects. Focus on tasks and team members that bring in the most revenue. Work with team members that bring in less to increase their billability or productivity.
In My Hours you can set up billable rates as well as labor rates for each project and team member individually.
Each team member can decide whether their work should not be billed to the client. In this case Labor rate is applied as normal, while billable rate remains 0. This way you can track how much time was spent on non billable work.
Employees and contractors can enter business expenses into My Hours. These can be either billable or not, depending on the nature of the expense. Expenses are assigned to a project in order to calculate the total cost of the project.
With your billable and labor rates set up, expenses and hours logged, My Hours will automatically calculate the balance for you.
With Activity report you can dig deeper and view your billable amount, labor costs and expenses by task or team member. Schedule the report to administrator's email every week or month.
In My Hours you can set project budgets to track progress towards your goal. Budgets can be set in a few different ways which we'll explore below.
At the start of the project, determine the number of hours you believe will keep the project profitable. Then set this number as the total budget, just like you see below.
For example: you normally pay your employees around $50 per hour and the client agreed to pay $5,000 for the project. This means that you must complete the project in under 100 hours to be profitable.
In case you have all your billable rates set with your markup, you should use the Billable amount-based budget. Simply enter the total amount the client is prepared to pay and you'll be able to track how well the project is going.
The best way to track profitability with budgets it to set up labor rates for your team. When you get a new project you can decide how much you are prepared to spend on it.
For example: the client agreed to pay $10,000 for the project and you want to keep the margin at 50%. You should set the total cost budget at $5,000. This way you'll be able to monitor the costs at all times and make some changes when things are not working as planned.
For tracking the profitability of monthly retainers, pick the "Monthly" budget. This setting will reset your budget, however it's set, every month. In the Economy report you'll be able to view your historic profitability month-by-month.