This article covers how to configure team cost in Factor so you can track project profitability.
Why Set Up Team Cost
Team cost allows Factor to calculate the labor cost incurred each time an employee logs time to a project. Without team cost configured, profitability dashboards and reports cannot show cost data. While your financial system can show firm-wide profit and loss, team cost in Factor lets you see profitability at the project and phase level.
Accessing Team Cost Settings
Navigate to SETTINGS > Your Team.
Click the dropdown and select Team Cost Settings.
You need the appropriate permissions to view and modify team cost information.
Entering Cost Values
For each employee, you enter two values:
Hourly Cost: The employee's direct hourly labor rate. To calculate this from an annual salary, divide the salary by the number of working hours per year (typically 2,000 for a standard 40-hour work week). For example, a $125,000 salary ÷ 2,000 hours = $62.50/hour.
Overhead Cost: Additional hourly costs beyond direct salary, including benefits, insurance, office space, equipment, and other operating expenses allocated to that employee. To estimate this, you can use your firm's direct salary expense (DSE) multiplier. A common multiplier in professional services is 1.5x, meaning overhead costs are roughly 1.5 times the hourly cost. Using the example above: $62.50 × 1.5 = $93.75 overhead per hour.
Combined cost in this example would be $62.50 + $93.75 = $156.25 per hour.
Estimating Overhead Cost
This isn't a Factor setting - it's just one common way firms estimate their overhead cost figure before entering it above. The "DSE multiplier" represents the ratio of total costs (salary plus overhead) to direct salary. To find your firm's multiplier, look at total expenses over a period and divide by total direct salary expenses. Industry multipliers for professional services firms typically range from 2.5 to 3.0 for breakeven (meaning you need to bill 2.5–3x an employee's hourly cost just to cover costs).
Setting Effective Dates
Each cost entry has an effective date. The values apply from that date forward until a new entry is made. Previous periods retain their original values. Update cost values when employees receive raises or when your firm's overhead structure changes. To set an effective date, a cost value must be changed to enable the effective date field.
How Team Cost Flows Through the System
Once configured, each hour an employee logs to a project incurs their combined hourly cost + overhead cost. This appears on the Profit Dashboard, where you can compare invoiced revenue against labor costs. For example, if you bill Michael's time at $187.50/hour and his combined cost is $156.25/hour, you earn $31.25 profit per hour on his work. The Firm Dashboard also uses team cost data to display firm-wide profitability KPIs.