# Costing and Billable Rates

Time tracking is most effective when it goes beyond simply logging hours—when it ties time to financial outcomes. In SmartTask, **Costing** and **Billable Rates** help you understand project profitability, manage budgets, and ensure accurate client billing. Here’s how they work:

### **What Are Costing and Billable Rates?**

* **Costing Rate**: This is the internal hourly cost of a team member. It helps you calculate how much a project *costs* your company based on the time team members spend on it.

  Example: If Alice's costing rate is ₹500/hour and she logs 10 hours, the internal cost is ₹5,000.

  `Cost = Time Logged (in hours) × Costing Rate`
* **Billable Rate**: This is the rate you charge your client for a team member’s time. It helps in generating invoices and calculating revenue.

  Example: If Alice's billable rate is ₹1,200/hour for a client project, those 10 hours bring in ₹12,000 in billables.

  `Billable Value = Time Logged (in hours) × Billable Rate`

Based on these data Profit can be calculated as below:

`Profit = Billable Value – Cost`

The screenshot below show [Analytics view](/fundamentals/time-tracking/analytics-view.md) of Time Tracking where a person’s cost and billable amount is reflected for a selected time period. You can further filter this by project, billable or non-billable logs.

### Setting Capacity and Rates for the Team

1. Go to the Organization Settings from the sidemenu, clicking on the settings icon at the bottom left
2. Click On Capacity and Billing Rates
3. Here you would be able to define capacity and billing rates for members and roles.

{% hint style="info" %}
Setting Capacity and Billing Rates for roles help you set placeholders for project templates
{% endhint %}

<figure><img src="/files/68hsNOxE8obomoBrkNtA" alt=""><figcaption></figcaption></figure>


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