Glossary
Project Margin
Also known as: Engagement margin, project profitability
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%.
Margin on paper and margin in fact diverge through the time record. Untracked hours make every project look more profitable than it is; the costs land in overhead instead, and the firm concludes its pricing is fine while its overall profit says otherwise. Accurate, complete time capture is not bookkeeping pedantry — it is what makes project profitability computable at all.
Services firms typically target 40–60% gross margin on delivery to fund sales, management and profit. The number matters most comparatively: margin by client, by project type and by fixed-fee-versus-T&M reveals which work subsidises which — and that comparison is only as honest as the hours behind it.
Fixed-fee projects need the discipline most. With revenue fixed, every consumed hour spends margin directly, so hour-level burn against the estimate is the project's real-time P&L. Firms that review it weekly renegotiate or re-scope while it still matters.
How Workclave handles this
Workclave records the cost side of margin automatically — complete, project-attributed hours with approval. Combined with cost rates, budget-versus-actual per project is a live view, and fixed-fee burn stops being a month-end revelation. employee cost per hour calculator.
Related terms
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.
Read definition →Effective hourly rate is the money actually collected from a client or period divided by every hour worked to earn it, including non-billable time. It is the truest measure of what work earns: a studio quoting ₹1,800 an hour that collects ₹3,00,000 for 220 hours of total effort has an effective rate of about ₹1,363.
Read definition →Scope creep is the gradual expansion of what a project delivers without a matching change in its price or timeline. Each addition is small — one more revision, a extra report, a 'quick' integration — and none triggers a renegotiation. The scope grows; the fee does not; the margin absorbs the difference.
Read definition →Realisation rate is the percentage of hours worked on client engagements that is actually invoiced to the client. It is calculated as hours billed divided by hours worked. A firm that works 120 hours for a client but invoices 102 has an 85% realisation rate — the other 18 hours were written off before the invoice went out.
Read definition →