Bill Rates 

Bill rates give you an idea of experience level.

They are also Typically used for Hourly work on projects. 

Bill Rates are for Hourly Projects or Phases where the fee is determined by the hourly rates.

Cost Rates 

As a services business, all you have to sell is time. But many companies don’t have a real-time view into their project or business financial situation. Mosaic is changing that by making it visual and easy to understand exactly how much money you are making on each project.

We understand that not all phases of a project are profitable, nor are all projects, but projects should never plan to lose money. Mosaic uses Cost Rate, or the Fully Burdened Rate, so you can clearly see the remaining amount, which would be the profit when managing project fees. 

While there is no industry standard overhead rate, it typically ranges from 150 to 200%, with the higher end being areas of higher overhead and/or higher sales process cost. 

Fortunately, the calculation is relatively simple.

Overhead Rate =        Total Overhead Cost/Billable Project Labor Cost

Let's say John’s pay rate (salary) is $50/hour — you multiply that number by the Overhead Rate to cover all costs. All non-billable time should be put into Total Operating Expenses. 

If you currently use a billing rate multiplier, simply remove the profit portion to obtain this number. 

What’s not included in Total Overhead Costs?

Since the list is shorter, we’ll start with what’s excluded. It’s all reimbursable expenses that are billed to clients.

What’s not included in Total Overhead Costs?

Since the list is shorter, we’ll start with what’s excluded. It’s all reimbursable expenses that are billed to clients: 

• Consultants

• Reimbursables, including:

  • shipping/courier/Fedex

  • Expediting/filing fees/permits

  • Printing costs

  • Material costs

  • Travel 

What’s included in Total Overhead Costs?

Total operating expenses including, but not limited to:

• Rent or mortgage

• Utilities

• Maintenance and repair

• Furniture

• Equipment costs, such as computers, printers, copy/fax/scanners, and phones

• Supplies such as paper, business cards, ink cartridges, computers, software

• Website

• General, professional and healthcare insurance

• Unbilled travel expenses

• Taxes

• Employee benefits like 401k and social security

• Association fees, subscriptions

• Marketing, advertising, business development

• Bookkeeping/accounting

Next, add non-billable labor costs of administrative, marketing & business development salaries. Also include the overhead time that your billable employees spend on non-billable work, as well as PTO.  The Utilization Report (Add a Help Link) on Mosaic splits the employees’ billable and non-billable time; i.e. if a partner is only 40% billable, only 40% of his salary goes to billable projects, and 60% to overhead cost. Perform this math for each employee. 

This is meant as a guide for your calculation. Given the impact on seeing your businesses’ profit clearly, we recommend you contact your accountant to confirm the Overhead Rate used.

Budget v. Fee

The Fee always remains constant, serving as a fixed amount, while the Budget functions as an adjustment factor to either frontload or backload the fees, independent of the actual phase fee structure.

In both Cost Rate and Bill Rate scenarios, the Fee and Budget should be the same numbers. The key difference lies in how profit is realized:

• In the Cost Rate view, the remaining budget after the project is completed represents the profit. Alternately you can turn on the setting to have a different budget for Cost and Bill Rates, which would allow you to set up the project where the remaining budget is set to reach zero dollars ($0) or greater, at project completion for a profitable project. 

• In the Bill Rate view, the remaining budget is setup to reach zero dollars ($0) or greater, at project completion, the built-in profit margin within the Bill Rates is automatically realized.