Setting up labor markups

Use this procedure to set up labor rates using markups and optionally include any standard billing rates. To use only standard billing rates, see Setting up standard billing rates for labor.

About setting up labor markups

You can bill labor by increasing, or marking up, the employee's hourly cost rate. You can also apply premium markups to premium time, such as overtime. You set up labor rates using the Labor tab of the window, which consists of two parts:

• Markup boxes, which you use to set up any labor and premium markups that you want to apply to most cost rates or amounts
• A table, which you use to set up exceptions to any markups by employee, employee type, and activity

1. Before setting up labor rates, first enter general information to set up your billing rate table.
2. On the Labor tab, enter a percent in each labor markup field to apply that particular markup to labor cost rates. For example, to mark the cost up by 40%, enter 40. Leave a zero amount if you do not want to apply a markup

3. Select the Use effective cost check box if you want this billing rate table to use effective cost. You must run payroll before you can bill the client at effective cost rates.
4. Select the Accumulate check box if you want to apply the markup for a field on the calculated rate of the cost plus the previous markup amounts instead of on just the original cost rate. Example

    

   

   • The cost rate for a transaction is $30.
   • The DPE markup increases the rate of $30 by 40% for a markup of $12 and a new rate of $42.
   • Because Accumulate is checked for Overhead, the overhead markup is applied to the new rate resulting from the DPE markup. The Overhead markup increases the rate of $42, instead of $30, by 130% for a markup of $54.60.
   • Since Accumulate is not checked for Profit, the Profit markup increases the cost rate of $30 by 15% for a markup of $4.50.
   • The result is a billing rate of $30 + $12 + $54.60 + $4.50 = $101.10.
5. The Premium Hours Markups box contains fields where you indicate how much you want to mark up amounts for special types of hourly rates, such as overtime or double time. Enter an amount as a percent. For example, to mark the cost up by 25%, enter 25.

More about premium markups

Ajera marks up the cost rate by the premium markups before applying any labor markups. Premium markups are applied to all cost rates unless you enter an exception row in the table and check the No Premium Markups cell.

For example, you may want to mark up overtime hours by an additional 25%. If the cost rate is $30, the premium markup increases that rate by 25% to $37.50. The labor markup for overtime hours is then calculated on a rate of $37.50 instead of $30.

The premium markups are applied to standard billing rates.

Note:

These fields correspond to the three premium pays that Ajera automatically sets up through the Company > Payroll > Pays menu, where the names can be changed.

6. Set up any exceptions, including standard billing rates, for the markups you just defined.
7. Click Save.
8. Click Close.

See also

Setting up expense markups

Setting up standard billing rates for expenses

Setting up consultant markups

Setting up standard billing rates for consultants