I want to... see whether my projects are profitable
Analyzing an individual project’s profitability won’t just show you how that project fared—it’ll also give you valuable insights into your business’s overall health. By looking closely at one project, you’ll be better equipped to set up future projects—and your whole team—for long-term success.
Want an in-depth look at creating projects? Check out our article on understanding the 3 project types.
Setting up your projects to analyze profitability
To assess a project’s profitability, you’ll need to compare your internal costs with your invoiced amounts. Here’s how to set up all the necessary data points.
1. Enter each team member’s cost rate
The cost rate is your internal rate—what a team member costs your business. Once you set a cost rate in each team member’s profile, Harvest will multiply their tracked hours by that cost rate for each project.
2. Set a budget—especially if it’s a Fixed Fee project
Setting a budget can help you run projects more smoothly from the get-go—especially if you have many projects going at once and don’t have time to manually monitor each.
You can even set email alerts when a certain amount (e.g. 85%) of the budget has been used—letting your team know it may be time to readjust or wrap up.
3. For Time & Materials projects, choose and set your billable rates
Harvest multiplies each time entry by the applicable billable rate to give you total billable amounts for each Time & Materials project. By making time tracking a habit, you’ll get a real-time view of your projects’ potential income.
4. Create invoices based on your billable amounts or fixed fee
Revenue isn’t revenue until you’ve asked for—and collected—it. When you invoice through Harvest, your account will show exactly how much you’ve charged your client, how much they’ve paid, and how much remains uninvoiced.
Use the Project Analysis page to keep your project on track
When it comes to both tracking your progress mid-project and analyzing how you did afterward, the project analysis page is a one-stop shop. To view a project analysis page, go to Projects, then click on the name of the project.
If you set a budget, you can easily monitor your progress as your team tracks their time to the project. Budget features like the project progress graph eliminate the guesswork about when and where you need to make adjustments as you go.
Once your team has wrapped up work on a project, profitability can be analyzed by manually subtracting your costs from the pre-tax invoiced total.
The Invoices tab at the bottom of the project analysis page will show the pre-tax total that you’ve invoiced for the project so far. From that invoiced total, manually subtract the total internal costs, shown just above the Invoices tab. These costs will also include any expenses your team has entered.
In the below example, you can take $4,773.50 (pre-tax invoiced total) and subtract $3,721.75 (total internal costs) to manually calculate an estimated profit of $1,051.75.
Plan your next project based on what you’ve learned
In addition to helping you assess profitability, the project analysis page offers crucial knowledge about how to set up future projects for success, too.
Using the Tasks and Team tabs, you can easily review exactly where your team members spent most of their time—and the costs associated with each. That way, you can see at a glance where you spent money as expected, and where you may need to switch gears on the next project.
And if cutting costs isn’t an option, you can always use this data to change how you price your next project—such as by increasing your billable rates.
Ready to try some of these things yourself? Go to https://id.getharvest.com to access your account.