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Profitability Metrics

Rize tracks several key profitability metrics to help you understand your financial performance. This guide explains what each metric means and how to interpret them.

Core Profitability Metrics​

Revenue​

What it is: Total income from billable work

How it's calculated:

  • Hourly Clients: Sum of (hours × hourly_rate) for billable entries
  • Retainer Clients: Daily retainer allocation × days in period
  • Hybrid Clients: Retainer base + overage revenue

What it tells you: How much money you're bringing in from client work

Cost​

What it is: Total labor costs for time worked

How it's calculated: Sum of (hours × cost_rate) for all time entries

What it tells you: How much you're spending on labor, regardless of whether time is billable

Profit​

What it is: Revenue minus cost

How it's calculated: Profit = Revenue - Cost

What it tells you: Your actual earnings after accounting for labor costs

  • Positive profit: You're making money
  • Negative profit (loss): Costs exceed revenue

Profit Margin​

What it is: Profit as a percentage of revenue

How it's calculated: Profit Margin = (Profit ÷ Revenue) × 100

What it tells you: How efficient your pricing and cost structure is

  • Higher margin: More efficient, better pricing
  • Lower margin: Tight margins, may need to adjust pricing or costs
  • Negative margin: Losing money on this work
Dashboard or overview showing all core profitability metrics

Image placeholder description: A dashboard or overview page showing profitability metrics. The image should show:

  • Large, prominent displays of:
    • Total Revenue (with breakdown by source if applicable)
    • Total Cost
    • Profit (with visual indicator if positive/negative)
    • Profit Margin percentage
  • Maybe a trend chart showing these metrics over time
  • Visual indicators (colors, icons) showing performance
  • Clear labels and formatting

Time-Based Metrics​

Billable Hours​

What it is: Total hours marked as billable

How it's calculated: Sum of time_spent for entries where billable = true

What it tells you: How much time is being charged to clients

Non-Billable Hours​

What it is: Total hours not charged to clients

How it's calculated: Sum of time_spent for entries where billable = false

What it tells you: Time spent on internal work, overhead, or non-chargeable activities

Total Hours Tracked​

What it is: Sum of all hours worked

How it's calculated: Billable Hours + Non-Billable Hours

What it tells you: Total time investment, regardless of billing status

Billable Percentage​

What it is: Percentage of total time that is billable

How it's calculated: (Billable Hours ÷ Total Hours) × 100

What it tells you: How efficiently you're converting time into billable work

  • Higher percentage: More time is billable (good for hourly clients)
  • Lower percentage: More overhead/internal time
Visual breakdown showing billable vs non-billable hours

Image placeholder description: A visual breakdown of time metrics. The image should show:

  • A pie chart or bar chart showing:
    • Billable hours (maybe in green)
    • Non-billable hours (maybe in gray)
  • Total hours tracked
  • Billable percentage displayed prominently
  • Maybe a comparison across different time periods
  • Clear labels and percentages

Rate-Based Metrics​

Effective Hourly Rate​

What it is: Average revenue per hour worked

How it's calculated: Effective Rate = Revenue ÷ Total Hours

What it tells you: Your actual earning rate, accounting for all time (billable and non-billable)

Note: Only calculated for hourly billing clients. Retainer clients don't have an effective hourly rate since revenue isn't tied to hours.

Average Cost Rate​

What it is: Average cost per hour worked

How it's calculated: Average Cost Rate = Total Cost ÷ Total Hours

What it tells you: Your average labor cost per hour

Rate Spread​

What it is: Difference between effective rate and cost rate

How it's calculated: Rate Spread = Effective Rate - Cost Rate

What it tells you: How much you're earning above cost per hour

  • Positive spread: Making money per hour
  • Negative spread: Losing money per hour
Visual comparison of effective rate, cost rate, and rate spread

Image placeholder description: A visual comparison of rate metrics. The image should show:

  • A bar chart or comparison view showing:
    • Effective hourly rate (if applicable)
    • Average cost rate
    • Rate spread (difference)
  • Visual indicators showing whether spread is positive or negative
  • Maybe multiple bars for different clients or time periods
  • Clear labels and dollar amounts

Retainer-Specific Metrics​

Utilization Percentage​

What it is: (For hybrid retainers) Percentage of included hours used

How it's calculated: Utilization = (Hours Worked ÷ Hours Included) × 100

What it tells you: How efficiently you're using the included hours

  • < 100%: Underutilized, room for more work
  • = 100%: Perfect utilization
  • > 100%: Over included hours, overage charges apply

Overage Hours​

What it is: (For hybrid retainers) Hours worked beyond the included amount

How it's calculated: Overage Hours = max(Hours Worked - Hours Included, 0)

What it tells you: How much additional work was performed beyond the retainer

Overage Revenue​

What it is: Revenue from overage hours

How it's calculated: Overage Revenue = Overage Hours × Overage Rate

What it tells you: Additional revenue earned beyond the base retainer

Screenshot showing hybrid retainer metrics including utilization and overage

Image placeholder description: A detailed view of hybrid retainer metrics. The image should show:

  • Retainer details:
    • Base retainer amount
    • Hours included
    • Overage rate
  • Current period metrics:
    • Hours worked
    • Utilization percentage (with visual gauge or progress bar)
    • Overage hours (if any)
    • Overage revenue (if any)
  • Visual indicators showing whether utilization is under/at/over 100%
  • Clear breakdown of base vs overage revenue

Profitability by Level​

Rize calculates profitability at multiple levels:

Team Overview​

Aggregates all clients, projects, and members to show overall team profitability.

Use cases:

  • Overall business health
  • Team-wide trends
  • High-level financial planning

Client Level​

Shows profitability for each individual client.

Use cases:

  • Client profitability analysis
  • Pricing decisions
  • Client relationship management
  • Identifying most/least profitable clients

Project Level​

Shows profitability for specific projects.

Use cases:

  • Project profitability tracking
  • Project pricing
  • Resource allocation
  • Project performance evaluation

Member Level​

Shows profitability contribution by team member.

Use cases:

  • Team member performance
  • Resource planning
  • Cost analysis
  • Capacity planning
Screenshot showing profitability metrics at different levels (team, client, project, member)

Image placeholder description: A multi-level view or navigation showing profitability at different levels. The image should show:

  • A hierarchical view or tabs showing:
    • Team Overview (aggregate)
    • Client breakdown (list of clients with metrics)
    • Project breakdown (projects within a client)
    • Member breakdown (members within a project or team)
  • Each level showing relevant metrics (revenue, cost, profit, margin)
  • Visual indicators (colors, icons) showing performance at each level
  • Maybe drill-down navigation or expandable sections

Daily vs Period Metrics​

Daily Metrics​

Calculated for each individual day:

  • Daily revenue
  • Daily cost
  • Daily profit
  • Daily hours

Use cases: Day-to-day tracking, identifying trends, spotting issues

Period Metrics​

Aggregated over a time period (week, month, quarter, etc.):

  • Period revenue
  • Period cost
  • Period profit
  • Period profit margin

Use cases: Reporting, analysis, planning, client billing

Comparison view showing daily metrics vs period aggregate metrics

Image placeholder description: A comparison or toggle view showing daily vs period metrics. The image should show:

  • A calendar or daily view showing daily metrics (maybe a line chart or daily bars)
  • A period summary showing aggregated metrics
  • Toggle or tabs to switch between views
  • Visual consistency between daily and period views
  • Maybe a trend line showing how daily metrics accumulate to period totals

Interpreting Metrics​

Healthy Profitability Indicators​

  • Positive profit: Revenue exceeds costs
  • High profit margin: Efficient operations, good pricing
  • Consistent daily revenue: (For retainers) Predictable income
  • Good utilization: (For hybrid) Using included hours effectively
  • Positive rate spread: Earning more than costs per hour

Warning Signs​

  • Negative profit: Costs exceed revenue
  • Low profit margin: Tight margins, may need pricing adjustment
  • High non-billable percentage: Too much overhead/internal time
  • Negative rate spread: Losing money per hour
  • Low utilization: (For hybrid) Not using included hours

Action Items Based on Metrics​

If profit is negative:

  • Review pricing (rates may be too low)
  • Review costs (cost rates may be too high)
  • Review time allocation (too much non-billable time)

If margin is low:

  • Consider raising rates
  • Optimize costs
  • Improve efficiency

If utilization is low (hybrid):

  • Look for opportunities to use included hours
  • Consider adjusting retainer terms

If overage is high (hybrid):

  • Consider increasing included hours
  • Review overage rate
  • Discuss scope with client

Next Steps​