What is project profitability?<\/h2>\n\n\n\n
Project profitability is the amount you earn as an agency owner for a specific project. It accounts for the money the project generated \u2014 but only after all project-related costs have been paid.<\/p>\n\n\n\n
How to measure project profitability<\/h3>\n\n\n\n
To measure project profitability, you need to calculate profit. Let\u2019s first distinguish between 2 types of profit \u2014 gross vs. net profit.<\/p>\n\n\n\n
Gross profit<\/strong> is the amount of money left when you subtract the costs directly associated with producing a product or delivering a service.<\/p>\n\n\n\n For a product-based business, that would be the cost of goods and direct labor costs of production. A service-based company would count the direct labor costs for providing the service and all other direct costs, like buying special equipment required for that specific project only.<\/p>\n\n\n\n Revenue \u2013 Direct project costs = Gross profit<\/strong><\/p>\n\n\n\n Net profit<\/strong> refers to the money left after subtracting all expenses \u2014 both direct and overhead costs.<\/p>\n\n\n\n Overhead costs are rent, utilities, and other expenses that are indirectly incurred while working on the project \u2014 they are costs of running the business.<\/p>\n\n\n\n Revenue \u2013 (Direct costs + Overhead costs) = Net profit<\/strong><\/p>\n\n\n\n \ud83d\udca1 CLOCKIFY PRO TIP<\/strong><\/p>\n\n\n\n Explore the differences between gross and net pay in more detail by reading this article:<\/p>\n\n\n\n To measure profitability, you need to calculate net profit. Then, you can determine the profit margin.<\/p>\n\n\n\n Profit margin<\/strong> is project profitability expressed as a percentage. Here\u2019s the formula for calculating the profit margin:<\/p>\n\n\n\n (Project revenue \u2212 Project cost) \/ Project revenue \u00d7 100% = Profit margin (%)<\/strong><\/p>\n\n\n\n Let\u2019s say your project generated $130,000 in revenue, and all project-related costs added up to $105,000. This is how you\u2019d calculate it:<\/p>\n\n\n\n ($130,000 \u2013 $105,000) \/ $130,000 x 100% = 19.23%<\/strong><\/p>\n\n\n\n So your profit margin would be 19.23%.<\/p>\n\n\n\n Calculate profit in Clockify<\/a><\/p>\n\n\n\n Project profitability focuses on the amount of money generated by a project after all the costs are deducted \u2014 but it isn\u2019t the only profitability metric.<\/p>\n\n\n\n You can also take a look at client profitability and team profitability. Client profitability measures how much profit a specific client brings to the company. Team profitability calculates the profit generated by a specific team.<\/p>\n\n\n\n \n Calculate billable hours, expenses, labor costs, total amount earned, and profit using one tool \u2014 Clockify by CAKE.com.<\/p>\n\n Here\u2019s how to track project profitability<\/a> using Clockify in 7 steps \u2014 and improve your agency’s financial health overall.<\/p>\n\n\n\n To monitor project profitability accurately, first create your projects in Clockify<\/a>. Open Projects and click Create project. Then name your project and optionally add the client.<\/p>\n\n\n Each project likely consists of separate tasks, so add those under your projects. To add a task, head over to the Projects tab and click on the project this task is associated with. Then, name your task and click Add.<\/p>\n\n\n If you have many different projects in your Workspace, you can use the Favorite projects<\/strong> option.<\/p>\n\n\n This option allows you to select the projects you work on most frequently. They will appear at the top of the list for quick access.<\/p>\n\n\n\n \ud83d\udca1 CLOCKIFY PRO TIP<\/strong><\/p>\n\n\n\n To find out how to manage projects effectively in Clockify in greater detail, refer to this useful guide:<\/p>\n\n\n\n To evaluate how your initial estimates compare to actual progress, you can set project estimates in Clockify<\/a>.<\/p>\n\n\n\n Clockify offers 2 types of project estimates:<\/p>\n\n\n\n The Time estimate<\/strong> option allows you to set your prediction of how many hours it would take to complete your project.<\/p>\n\n\n\n The Budget estimate <\/strong>setting is for estimating the amount of money you think it would cost to complete the project.<\/p>\n\n\n Budget estimates can be manual or task-based. The manual estimates<\/strong> option requires you to add a fixed amount for the entire project. The task-based<\/strong> option allows you to set budget estimates for each project individually.<\/p>\n\n\n\n To spot potential cost overruns<\/a> ahead of time, use Clockify\u2019s Forecasting feature.<\/p>\n\n\n You can see the forecast for a specific project by clicking on the Projects tab and opening the project. Then, click on Forecast. Clockify will show you how much of the budget was already spent<\/strong> based on tracked work hours and expenses. It will also display the remaining budget and whether it\u2019s expected to go over the estimate at the current pace.<\/p>\n\n\n\n Knowing whether you\u2019re heading over budget allows you to decide how to proceed. For example, you may find that labor costs are high because some team members got stuck on one task. That way, you can make adjustments in your team so that team members who are better equipped to handle this task can step in. <\/p>\n\n\n\n \ud83d\udca1 CLOCKIFY PRO TIP<\/strong><\/p>\n\n\n\n If you want to learn more about project forecasting, here\u2019s an article that explains it in simple terms:<\/p>\n\n\n\n For Clockify to calculate your profit, you need to set cost and billable rates<\/a>. Cost rates are the hourly rates you pay your team. Billable rates are the rates you charge your clients.<\/p>\n\n\n\n In Clockify, rates can be:<\/p>\n\n\n\n If you set multiple kinds of rates at the same time, the more specific rate overrides the less specific one. In the list above, rate types are ordered from the least specific to the most specific. For instance, if you set a workspace rate and a project-based rate, Clockify will use the project-based rate for all projects that have set rates.<\/p>\n\n\n To monitor project profitability, you\u2019re most likely going to use project-based rates the most. If you don\u2019t set any rates, you won\u2019t be able to generate profit reports and identify which projects are unprofitable.<\/p>\n\n\n\n Track billability and labor costs<\/a><\/p>\n\n\n\n Clockify lets you track both billable and non-billable tasks. Billable time will count toward profit, while rates won\u2019t apply to non-billable projects.<\/p>\n\n\n To set up billable hours, click on the dollar symbol. If the symbol is blue, your project is marked as billable. If the symbol is grey, your project is considered non-billable.<\/p>\n\n\n\n \ud83d\udca1 CLOCKIFY PRO TIP<\/strong><\/p>\n\n\n\n Read more about the difference between billable and non-billable hours here:<\/p>\n\n\n\n For accurate project profit monitoring in Clockify, your team needs to track time on each task. Based on its billable status and set rates, Clockify will calculate your costs and profit.<\/p>\n\n\n\n You can choose from multiple options for tracking time spent on tasks:<\/p>\n\n\n\n\n
Project vs. client vs. team profitability<\/h3>\n\n\n\n
Project Profitability Tracker<\/h2>\n
![\"Illustration\"](\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/templates@2x.png)
\n <\/picture>\n <\/div>\n<\/div>\n <\/p>\n\n\n\nHow to use Clockify by CAKE.com to monitor project profitability<\/h2>\n\n\n\n
#1: Create projects and tasks<\/h3>\n\n\n\n
![\"Creating](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Creating-a-project-in-Clockify.webp\")
![\"Adding](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Adding-a-task-in-Clockify.webp\")
![\"Favorite](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Favorite-projects-in-Clockify.webp\")
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#2: Set project estimate<\/h3>\n\n\n\n
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![\"Setting](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Setting-budget-estimates-in-Clockify.webp\")
![\"Forecasting](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Forecasting-in-Clockify-1.webp\")
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#3: Set cost and billable rates<\/h3>\n\n\n\n
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![\"Setting](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Setting-the-project-based-billable-and-cost-rate-in-Clockify.webp\")
#4: Mark projects as billable\/non-billable<\/h3>\n\n\n\n
![\"Marking](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Marking-projects-as-billable_non-billable-in-Clockify-1024x249.webp\")
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#5: Track time on tasks<\/h3>\n\n\n\n
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![\"Timer](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Timer-in-Clockify-1024x380.webp\")
![\"Tracked](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Tracked-time-viewing-permissions-in-Clockify.webp\")
![\"Illustration\"](\"https:\/\/clockify.me\/learn\/wp-content\/themes\/cake-learn\/src\/images\/clockify\/banners\/landing-3@2x.png)
\n <\/picture>\n <\/div>\n<\/div>\n <\/p>\n\n\n\n![\"Expense](\"https:\/\/clockify.me\/learn\/wp-content\/uploads\/2026\/08\/Expense-tracking-in-Clockify.webp\"){kind=tracking}