There are two figures to keep in mind when it comes to labour rates, the internal and external rate per hour.

External Rate/Hour (ERPH)

The external rate/hour (or charge out rate) is the rate that you charge your customer for each hour you work for them. On fixed cost projects, this figure is used in a proposal to calculate the overall labour element of the quote. In a time and materials project, this is used to calculate what you need to bill the customer for any labour carried out.

Internal Rate/Hour (IRPH)

The internal rate/hour is a fixed hourly rate that is applied to the work that each employee carries out on behalf of the company.  This rate is multiplied by the number of hours worked on a project by each employee to determine the overall labour cost to the company.  You edit the rates in the Financial section of the employee’s record.

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The formula used to determine the rates are as follows:

Normal Hours

(Employee’s RPH x (1 + Rate Loading)) + Departmental Loading

Overtime Rate

Employee’s RPH x (1 + Rate Loading)


John’s hourly rate is 30 euros, the departmental loading is 15 euros, and his rate loading is 10%.  If John works for five hours on a project, then the cost to the company is:

(30.00 + 3.00 + 15.00) x 5 = 240.00 euros

If John also worked an extra 2 hours overtime on that project that day the following costs would be added:


(36.00 + 3.60) x 2 = 79.20 euros

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