Get ready for our improved hourly rates model
We introduce two new functionalities in our hourly rates model: Price indexation and project specific hourly rates. Read more about how you can benefit from them.
21 January 2020 we release our improved hourly rates model which lets you price index and creates project-specific hourly rates without entering the system administration.
These two new options are important for you as project manager and project controller (invoicing projects) and system administrator (if you control price lists).
Please notice that price indexation applies to users on an Enterprise plan with invoicing enabled. You can use project-specific hourly rates on the Growth, Professional or Enterprise plans with invoicing enabled.
Here we describe the key points in our improved hourly rates model, and what you need to do now and when the release is out to get the maximum profit from the new options.
Price indexation applies to:
- Users on Enterprise plans with invoicing enabled
Project hourly rates apply to:
- Users on Growth, Professional or Enterprise plans with invoicing enabled
The advantages with our improved hourly rates model:
1. You avoid the chaos in your hourly rates and you get a better overview of your work. The hourly rates are only placed on the projects
2. Increased flexibility and it is easier to manage hourly rates in TimeLog
3. When you mirror your agreement with the customer directly in the project-specific hourly rates, you avoid errors in your invoicing and to have a lot of work cleaning up data
The key difference between the current and the improved hourly rates model: Project specific hourly rates
The key difference between the current and the improved hourly rates model is project specific hourly rates.
In the current hourly rates model, the project hourly rates are decided by the standard price list and the customer specific price list, if you have created one for your customer.
This means that to change the rate for a single service, e.g. design on a project, which differs from the standard rate, you can change your standard rate to reflect your rate for design in the customer specific project.
But if you do, the rate change will hit all your projects with the customer, where design is a service. It is not optimal, when the rate for design is different from project to project.
Alternatively, you can create customer specific rates, but it will give you a long and chaotic standard price list. A challenge many of you face and want solved.
An example of the key difference
Let’s say TimeLog as standard charges 300 EUR for design. We have customer X for whom we work on two projects: Project A and Project B.
On Project A, we have agreed with the customer that design costs 250 EUR, maybe because we have made a discount scheme. But at Project B, we have agreed with the customer that design costs our default rate 300 EUR.
As a project manager, I am not interested in changing our default rate for design from 300 EUR to 350 EUR to select the design rate of 250 EUR on Project A. Because if I do, the rate for design in Project B will too change to 250 EUR.
My service now gets 50 EUR cheaper than what I agreed with the customer. The consequence is that I invoice the customer the wrong amount and lose money.
Alternatively, I as a project manager can differ from the standard price list by creating a customer specific hourly rate of 250 EUR for design on Project A.
The first challenge is that the customer specific hourly rate also appears on all my existing and future projects for customer X.
So there will be two rates for design on all my projects for customer X, the customer specific hourly rate of 250 EUR from Project A and the standard rate of 300 EUR.
This causes confusion and provides the risk of erroneous invoicing. My overview in the system administration turns chaotic too, because I will see a list of my customer specific hourly rates in addition to my standard price list.
My second challenge is that I need to remember to select the special rate of 250 EUR in Project A, when the standard rate of 300 EUR is suggested when I e.g. allocate an employee to the project. It easily gets chaotic, when you have many projects for the same customer, which leads to confusion and incorrect invoicing.
And this is where our improved hourly rates model with the project specific hourly rates enters the picture.
With the improved model, the standard price list works like a template for the projects, which get their own hourly rates which you can correct without impacting the hourly rates on your other projects for the customer.
How to video: TimeLog's improved hourly rates model
The advantages of using project specific hourly rates
The first advantage is that you avoid the chaos in your hourly rates and you get a better overview of your work. The hourly rates are only placed on the projects. As project manager, you no longer need to focus on standard rates and customer specific hourly rates.
The second advantage is increased flexibility and it is easier to manage hourly rates in TimeLog. With the project specific hourly rates, you can freely change a rate on one project without the change is reflected on other projects for the same customer.
In this way, the project manager from the example can simply change the rate for design in Project A to 250 EUR matching the agreement with the customer, and without affecting the default rate of 300 EUR or the rate for design on Project B.
The third advantage is that when you mirror your agreement with the customer directly in the project specific hourly rates, you avoid errors in your invoicing and to have a lot of work cleaning up data.
Price indexation
To follow the general price level in the society, it is from time to time necessary to increase the hourly rates for services to the customer.
With our improved hourly rates model, it is possible to mass index the following:
- All hourly rates with a specific percentage for selected customers, projects or contracts
- All or selected hourly rates at a default price list with the option to select which linked customers, projects or contracts you would like to update with the indexing
- All or selected hourly rates at a customer price list with the option to select which linked projects or contracts at the customer, you would like to update with the indexing
As the hourly rates are now placed on each single project, it is possible to index selected projects. It is also possible to correct the standard prices to 2020 prices, without affecting the ongoing projects.
Please note that you can only index back in time and the hourly rates on the projects are indexed immediately.
This means that time registrations are updated from the date you enter the indexing should be effective from. All hour registrations created or updated after the indexing will use the new hourly rate.
Therefore, we recommend you complete and close either the timesheets or the accounting periods before the date you would like to index from.
How to video: Here is how you price index
An example of the new price indexation option
If you e.g. wish to increase all hourly rates with 2% from 1 January 2020, all employees need to complete their time registration in TimeLog for 2019. Then you close all timesheets or the accounting period for December 2019.
Once this is done, e.g. 20 January, you select the indexation option to create a percentual indexing of all customers per 1 January 2020.
TimeLog will now index the hourly rates on all projects with 2% and re-calculate the value of all hours from 1 January 2020 or later.
Please note the indexation does not update hour registrations already on an invoice or voucher, so you need to perform the indexation before the invoicing of the January hours start.
Summary
While you in the current hourly rates model only can change a project’s hourly rates through the standard price list or by creating customer specific hourly rates, you can with the improved model change a project’s hourly rates directly on the project.
So you do not need to look at the system administration or customer specific price lists, only the project specific hourly rates.
You can now also mass index the customers and projects you would like to index without affecting the ones who should not be indexed.
See our webinar about the improved model
Here is what you need to do as a system administrator
After we have released our improved hourly rates model 21 January, you must:
- Go through all customer specific price lists and correct them to mirror the hourly rates which should be used next time a project is created for the customer
- Deactivate all customer specific hourly rates which are only relevant for ongoing projects and should not be used on future projects for the customer
- Reset all adjusted standard hourly rates if the rate for the service should not be the adjusted price for future projects, but follow the standard hourly rate. See how below. Navigate to the customer price list
Here is what you need to do as a project manager/controller
- Go through all your time and material contracts and make sure the hourly rates are correct
- Remove all superfluous hourly rates from your projects to avoid the risk of them being used in the future
- Change the hourly rates on your projects where you find it relevant to secure the right pricing, then you avoid spending time to correct hourly rates when you invoice. Read more here
