Understanding Margin and Markup
This topic discusses:
Margin statuses.
How margin and markup are calculated.
Determining related costs for margin markup calculations.
Margin represents the amount of money that you make for every hour that a person works. Markup is the percent difference between the bill rate and pay rate. The following table lists the available statuses for margins. These statuses apply to the rates in the temporary orders on the Assignment pages.
Term |
Definition |
|---|---|
|
Acceptable margin achieved. The calculated margin is above the cautionary margin established for the specified job code. If you meet margin requirements, a green diamond appears next to the field. |
|
Margin below normal levels. The calculated margin is above the critical margin, but falls at or below the cautionary margin established for the specified job code. A yellow triangle appears next to the field to indicate that the ratio is not within margin requirements. |
|
Unacceptable margin. If the calculated margin falls at or below the critical margin established for the specified job code, a red square appears next to this field. |
(Green = acceptable)
(Yellow = caution)
(Red = critical)Note: Margin and markup functionality is only applicable to temporary orders and temporary assignments.
When a bill and pay rate is entered on the assignment, the margin and markup calculations are dependent upon your prior margin configuration. This section discusses how you calculate margin and markup.
Calculating Margin
The margin calculation on the Assignment page subtracts costs from the bill rate and then divides by the bill rate, taking into consideration the pay rate, overhead costs (fixed cost margin), and workers compensation premiums.
Calculating Markup
The markup calculation on the Assignment page subtracts the pay rate from the bill rate and then divides by the pay rate.
This topic discusses how to determine the following components of the margin and markup calculations:
Fixed cost.
Workers' compensation cost.
Cost.
Determining Fixed Cost
The fixed cost depends on the fixed cost margin and pay rate. Fixed cost is the additional cost (overhead) that is incurred for every hour of employee pay, excluding workers' compensation. This fixed cost margin is defined as part of the staffing branch configuration.
Determining Workers' Compensation Cost
The workers' compensation cost is calculated based on the rate type selected on the Workers' Comp Rates page.
If the workers' compensation rate type = percentage, then
If the workers' compensation rate type = per hour, then
Determining Cost
You must calculate cost prior to determining the markup or margin.