Glossary
Cost Rate vs Bill Rate
Also known as: Loaded cost rate
The cost rate is what one hour of a person's time costs the business — salary plus overheads spread over working hours. The bill rate is what a client is charged for that hour. The ratio between them, the multiplier, is where a services firm's entire economics lives: rent, bench, sales, management and profit all have to fit inside it.
A ₹12 lakh CTC over roughly 1,920 working hours is a ₹625 hourly cost — before adding equipment, software, office and management loading, which typically pushes the true figure 15–30% higher. If that person is 75% utilised, each billable hour must carry ₹833 of salary cost alone.
This is the arithmetic behind the standard services heuristic that bill rates should run 2.5–3× salary cost per hour. A lower multiple is not automatically wrong, but it means the difference must come from somewhere: higher utilisation, lower overheads, or thinner margin.
The comparison only works when both numbers use the same denominator. Cost per available hour against revenue per billed hour flatters the multiple; computing both per billable hour is what reveals whether an engagement, a team or a client actually makes money.
How Workclave handles this
Workclave supplies the utilisation figure the cost-rate calculation depends on, measured from approved sessions rather than assumed. The cost per billable hour you price against becomes a fact that updates monthly. employee cost per hour calculator.
Related terms
A blended rate is a single bill rate quoted for a team of mixed seniority, calculated as the hours-weighted average of each role's rate. If a project uses 60 senior hours at ₹2,500 and 140 junior hours at ₹1,200, the blended rate is ₹1,590 — one number that stands in for the whole staffing mix.
Read definition →Utilisation rate is the percentage of an employee's available working time that is spent on billable client work. It is a core efficiency and profitability metric for IT services firms and agencies. A higher utilisation generally means more of your paid capacity is generating revenue.
Read definition →Bench time is time an employee in a delivery role spends without a billable allocation — between projects, awaiting a start date, or unassigned after a ramp-down. The person is paid; no revenue stands against the cost. The term comes from consulting and IT staffing, where being 'on the bench' is a normal phase between engagements.
Read definition →Project margin is what remains of an engagement's revenue after the cost of delivering it — primarily the hours consumed, priced at each contributor's cost rate. A ₹6 lakh project that consumes 320 hours at a ₹900 blended cost rate has a delivery cost of ₹2.88 lakh and a gross margin of 52%.
Read definition →