Cost Rate
A cost rate is what an hour of work actually costs you - typically salary plus taxes, benefits, and overhead, divided by working hours. It is the internal counterpart to the billing rate you charge clients.
How it works
- Estimate fully loaded cost per hour, not just salary.
- Compare it to the billing rate: the difference is gross margin.
- Use it to check whether a finished project actually earned its time.
Example
A salary of 60,000 a year, plus 18,000 in employer taxes and benefits and 12,000 of allocated overhead, is 90,000 fully loaded. Divide by the hours that person is genuinely available to work across the year, say 1,800 once leave and holidays are out:
Cost Rate = 90,000 / 1,800 = 50 per hour
Salary alone would have put the figure near 33, which is why the loaded number is the one to price against.
Why it matters
Without a cost rate, "profit" is a guess. A project can bill well and still lose money once real cost per hour is included.
How Sandtime.io fits
Sandtime.io records hours with cost and revenue rates, so profit and margin reflect what really went into the work. Check a project with the project profitability calculator.
Related Terms
The cost rate is the internal counterpart to the billing rate, drives project cost and margin against revenue, and can vary over time as a temporal rate.