Agencies, consultants, contractors and other service businesses in the Philippines often share the same problem: the team is always busy, but the bank balance does not reflect it. The reason is usually simple. Nobody knows which projects actually make money.
Project profitability is not a mystery. It needs three numbers: what the project was supposed to cost, what it really cost, and what you collected.
Step 1: Know your true cost per person
Many owners use only the salary. But your real cost per employee is higher. For an employee earning ₱30,000 a month, a monthly estimate looks like this:
| Cost | Per month |
|---|---|
| Basic salary | ₱30,000 |
| 13th month accrual (1/12) | ₱2,500 |
| SSS employer share + EC | ₱3,030 |
| PhilHealth employer share | ₱750 |
| Pag-IBIG employer share | ₱200 |
| True monthly cost | ₱36,480 |
That is already about 22% more than the salary, before equipment, software, rent, internet or paid leave. See our guides on contributions and 13th month pay for the details.
Step 2: Turn cost into an hourly rate
No one is billable 100% of the time. Suppose the employee above has about 176 working hours a month and is billable 70% of the time, which is about 123 hours.
₱36,480 ÷ 123 hours ≈ ₱296 per billable hour
That is the minimum you need to charge just to cover this person's direct cost. Your price must also pay for overhead and leave room for profit.
Step 3: Set a budget for every project
Before you start, write down:
- Estimated hours per role, multiplied by the cost rate
- Outside costs: freelancers, software, ads, travel
- Your expected profit margin
- What the client will pay, and when
This becomes your project budget, the line you compare reality against.
Step 4: Track actuals weekly, not at the end
Time tracking is the part most teams resist, yet it is the data that makes everything else work. Ask each person to log time by project, even in 15-minute blocks. Every week, compare hours used vs hours budgeted. If 70% of the hours are gone and the project is only 40% done, you have a problem you can still fix.
Step 5: Check cash, not just invoices
A profitable project can still hurt you if payment is late. Track:
- Invoices sent and unpaid, and how old they are
- The amount actually received after any tax withheld by the client. See the BIR Form 2307 guide
- Down payments and milestone payments
Step 6: Review after every project
When a project ends, record the final margin and the reason it was higher or lower than planned. After a few projects, patterns appear. Maybe a certain type of client always changes the scope, or a certain service is cheaper to deliver than you thought. Use this to adjust your prices.
A single view helps
All of this is easier when accounting, payroll and projects live in the same system, because the labor cost, the time logged and the invoices already speak to each other. That is the idea behind GodoERP: online accounting, payroll and project management for Philippine businesses. Try it free or ask us a question.
Figures in the examples are illustrations. Your own salaries, hours and overhead will differ.