Billing Rates

In Estimate, the Billing Rate is defined as how much the Contractor is charging your client to utilize one of your resources within the Resource Rate Register. The billing rate can also be viewed as how much money that your client is expected to pay for utilizing one of the resources for a specified amount of time. It’s important for you as a contractor to have a way to more quickly see your charge rate to compare against what you will ultimately bill your client, also known as your Billing Rate.

Contractors need a reliable way to price projects utilizing various markup strategies with clear visibility into various costs that drive the markup amounts. It’s important for contractors to be able to:

  • Apply various costs that drive markups
  • Apply billing rate gains (difference between contractor’s cost vs billing rates/client cost)
  • Have clear visibility into the true margin based on both cost and billing rates
  • Compare the cost and billing rates within the CBS

As a result of properly pricing projects, contractors can now create and view various Billing Rate Reports showing:

  • A summary of billing rates in lieu of the cost rates for a client to see, Estimate Summary reports
  • Cost item breakdown that shows associated cost categories, billing unit rates, and total billing amounts, Billing Rate Summary
  • An analysis of reources and their margins, utilization counts and billing amounts, Margin Analysis report

Charge Rate

The Charge Rate is the contractor’s cost for a resource. These costs include actual labor, any types of fringes, labor taxes plus insurances, and more. These costs are all tracked within the Charge Rate’s Cost Category Breakdown in a resource rate. The charge rate is not a cost to the client and does not include any profit, markup or overhead. Charge Rates can be setup for a resource by going to the Setup tab and selecting Resource Rates. Then opening a resource rate record, and selecting the Charge Rate tab.

Billing Rates Setup

Billing Rates have 3 scales where you can determine the appropriate billing and markups rates.

  • Scale 1 – regular time
  • Scale 2 – overtime
  • Scale 3 – double time

You can enter a billing rate markup as a dollar amount in the Billing Rate Markup field or as a percentage in the Billing Rate Markup % field. After double clicking a resource rate, you will see the resource record.

The Billing Rate tab includes the following fields.

Name

Description

1. Charge Rate

The amount of money it costs a contractor to occupy a resource. Also known as the contractor’s cost.

2. Billing Rate

The amount a contractor charges a client to utilize a resource rate. The billing rate can also be viewed as how much money the client is expected to pay for utilizing one of those resources for a specified amount of time.

3. Billing Rate Markup

The dollar value amount of profit added to the charge rate that a contractor generally determines. This can include certain contractor fees that the contractor has deemed to include.

4. Billing Rate Markup %

The percent dollar value amount of profit added to the charge rate that a contractor generally determines. This can include certain contractor fees that the contractor has deemed to include.

The below example shows a contractor’s Charge Rate of $27.48 in Scale 1. The Billing Rate Markup is 45% of the $27.48 Charge Rate, which is a $12.37 Billing Rate Markup. The total Billing Rate is $39.84, which is the price the contactor would charge a client.

Step by Step — Billing Rate Setup

  1. Use the Training Job for this example. From the Ribbon, select the Setup tab.

  2. Under the Resources tab, select the Resource Rates drop down arrow. Then select Labor. The Resource Rate Register opens to the Labor tab.

  3. Select the LW WELDERD Welder Resource Code from the list. Then select the Actions tab. Under the Edit section, select Open.

  4. After the Labor Rate Record opens, select the Billing Rate tab.

  5. Change the Billing Rate Markup % to 15 for Scale 1, then tab out of the field.

    • The system automatically calculates the Billing Rate Markup field to $6.38.
    • This represents 15% of the Charge Rate.
    • The Billing Rate is now equal to the Charge Rate plus 15%.

  6. Change the Billing Rate Markup to $14.68 for Scale 2.

    • The Billing Rate Markup % is now 23% and the Billing Rate is now $78.51.
    • Scale 1 Charge Rate of $42.56 plus (half of $42.56) $21.28 equals a Scale 2 rate of $63.83.
    • Scale 2 rate of $63.83 plus 23% equals a billing rate of $78.51

Cost vs. Billing View

The Detail tab in a Cost Item record lets you compare the Unit Cost (charge rate) against the client’s Billing Unit Rate.

To view the Cost vs. Billing View within a Cost Item record, select a cost item record, click on the Detail tab, then select the Billing Rates View.

The Detail tab includes the following fields.

Name

Description

1. Unit Cost

This is the contractor’s cost for this resource rate, also known as the Charge Rate.

2. Billing Unit Rate

The amount a contractor charges a client to utilize a resource rate, also known as the Billing Rate.

3. Total Cost (Forecast)

This is the Unit Cost multiplied by the number of hours utilized.

4. Total Billing Amount

This is the Billing Unit Rate multiplied by the number of hours utilized.
  • Below is an example of how to view the Cost vs. Billing View when the Production Days are equal to 1.
  • The Unit Cost (Charge Rate) and the Billing Unit Rate values both values derive from your Resource Rate.

Step by Step — CBS Cost vs. Billing View

  1. From the Ribbon, select the Estimate tab.

  2. Select Cost Breakdown Structure (CBS). The Cost Breakdown Structure (CBS) Register opens.

  3. Create a cost item called Fabrication Work. Double click on the new cost item to open it.

  4. Select the Detail tab. Then select LWD Welder from the Code field.

  5. Go to the Production default data block. In the Days field, enter in 1.

  6. You are now able to compare your Total Cost against the Billing Rate. Your Total Cost is $226.96 for 8 hours, while you Total Billing rate to the client is $317.74.

Billing Rate Reports

There are several reports you can run to view resource costs, billing rates, and mark-ups. Some of these reports you may choose to provide to your customer. Other reports, you may choose to use only as a way to view your markup margins prior to submitting to your customer.

To locate these reports, select the Setup tab. Then select Reports. From the Reports window, select Billing Rate Reports.

Billing Rate Summary report

The Billing Rate Summary report shows cost items including cost category details.

The end of the report shows you a total of your Direct and Indirect cost markups, and also includes a Total Billing Amount at the bottom far right.

Estimate Details with Billing Rate report

The Estimate Details with Billing Rate report shows a selection of resources with associated billing rates and utilization counts.

Margin Analysis report

The Margin Analysis report is beneficial for displaying both mark-up and margin values for selected resource rates.