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12.4 How do I calculate hourly cost rates |
  
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12.4 How do I calculate hourly cost rates |
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12.4.1 To calculate initial hourly cost rates for every employee and work type:
Employee hourly rate (1) = employee cost (salary/wage + super + benefits FBT) divided by annual billable hours for each employee (consultants typically bill around 70% of their work hours)
Hourly vehicle overhead rate (2) = sum of repairs & maintenance, fuel, insurance, depreciation and finance etc., divided by total annual billable field work hours for the business.
Hourly business overhead rate (3) = sum of rent, insurance, utilities, depreciation, cleaning, accounts, legal etc. divided by total annual billable hours for the business.
Apply an hourly rate (1) to each employee and add the vehicle (2) & business (3) overheard rates to their field work types. For office work types only add business overhead (3) to these work types.
You can increase accuracy by calculating different higher hourly business overhead rates for office work and lower hourly business overhead rates for field work.
If you have specific costs associated with certain work types, these may be applied as well.
After you have used Latitude for 1 year, you will have real billable hours and will therefore not have to estimate each employee's billable hours when you recalculate these figures.