Introduction to billing for labor

IMPORTANT  Read this before you set up roles, work types, or fixed price contracts!

NOTE  In order to really understand Autotask, you should understand how Autotask converts time into money. Refer to How Autotask Turns Time into Money.

Customers frequently ask us what roles, work types, or fixed price contracts they need to set up. Well, it depends...

What are your options?

Here is how Autotask customers price their service items. Most use a combination of all three strategies.

EXAMPLE  Scenario 1:
Mark, who is a Network Engineer, is always billed out at twice the rate of Josh, a Standard Technician.
• Standard Technician: $75.00
• Network Engineer: $150.00
Resources with different seniority use different role rates, even if they do the same work, and work types do not alter the billing rate. Refer to Adding billing roles.

EXAMPLE  Scenario 2:
The charge depends on the type of labor being done. "On-site Support" is 1.5 times the price of "Phone Support".
• Phone Support: $100.00
• On-site Support: $150.00
• Server Configuration: $140.00
Different types of labor are set up as work types that alter the billing rate for the single "Technician" role rate. Refer to Work types.

EXAMPLE  Scenario 3:
Example: Your largest customer accounts for 30% of your total business, and receives a 20% discount off your normal rates. Discounts to your normal rates are managed using contracts. Refer to Introduction to contracts.

Best practice recommendations

In Autotask, the charge for labor is always the product of the selected Role Rate and the modifications of the rate by the Work Type. If you want to charge a customer $150/hour for Server Configuration, there are 2 ways to get there:

  • You select the "Network Engineering" Role from Scenario 1. Your Work Types are not configured to alter the role rate, and the Resulting charge is $150.
  • You select your "Technical Consulting" base rate of $ 100. This is the only rate you have set up. You select "Server Configuration" as the Work Type, which is set up to multiply the Role Rate by 1.5. The resulting charge is also $150.00.

You will need to decide whether service charges will be determined by Role Rates or Work Types.

For most Autotask customers, service rates are determined by the type of work being performed. If this is your scenario, do the following:

  1. Set up one role rate only. This is the base rate all charges are calculated from. You can call it something like "Technical Consulting" or "Standard Technician".
  2. Set up all the work types you need to price different services. When you configure each work type, use the Billing Rate and Hours Adjustment to price different service types.

Advantages:

  • Work Types give you much more pricing flexibility
  • In each resource drop-down list, a resource is displayed once only.
  • It simplifies billing calculations. The base rate is constant, and the price is determined by the type of service. You avoid scenarios where both the rate and the work type impact the charge.
  • Customers instinctively understand that the type of service determines the price.
  • In QuickBooks, the most commonly used accounting application the charge is also associated with the type of service.

Disadvantage:

  • If you change the Role rate with a time & materials contract, all services are discounted at the same percentage, since all labor is calculated off the one base rate. You lose the flexibility to provide different discounts for different role rates.

NOTE   If you use a custom rate or a flat rate for a work type, those will not be modified by the time & materials contract. Only role rates are modified by a contract.

  • Set up one role for each hourly price level. Use the minimum number of roles you can get away with; you should not set up multiple roles at the same price level. The function of roles is to set up and report on hourly rates, not to accurately reflect your job titles.
  • Set up work types for activities that alter all role rates in the same way. You will probably need a Work Type for "Business Hours Support" (does not alter the Role rate) and one for "Emergency Support", where you maybe double the Role rate.