To help you understand your report and how we are calculating our numbers, here is a quick list of  explanations:

• Monthly Agreement Amount - We simply just view the amount shown on each agreement and pull that amount. if you charge for an agreement annually, semi-annually, or any other duration, we break down this agreement to get the monthly amount to help display in your profitability report.


• Adjusted Amount - In most cases, this will be the same amount as Monthly Agreement Amount unless you have Exclusions (see below) in which we use the Monthly Agreement Amount and subtract the monthly exclusion amount (Example: $6,695 - $650 = $6,045). Basically, this is to filter out any fixed costs that you might have to ensure your utilization is accurate.

• Exclusion - Based on your agreements, you may have bundled some products that are included in the monthly fee. If you have these types of agreements, it's important to exclude those products out of your agreement so we are only looking at the revenue for labor. (Example: The agreement above has $650 worth of BDR that is bundled in this agreement. No matter how many hours they put on this agreement, we would still need to pay the $650 to give this client BDR. When looking at utilization, we DO NOT want to consider this $650 in with our revenue because it has no effect on the amount of labor that is being done. If we left this $650 amount in with our revenue, then our utilization percentage would be deflated and would not give us an accurate representation of this client)
  


• Covered Amount & Covered Hours - On a daily basis, we pull all of the time entries associated with this agreement and find the covered amount and covered hours. The covered hour's column simply adds the total amount of time that is covered under that specific agreement. However, the covered amount takes the hourly rate on each time entry and multiplies it by the number of hrs to get you an accurate dollar amount for that month. (The hourly rate could differ based on work type, engineer cost, etc.)

             Example - Let's say there was one time entry that had 2 hrs on it. If the hourly rate for that time entry is $150, then your covered amount is $300
                     Covered hrs = 2 
                     Hourly Rate = $150 
                     Covered Amount = $300 ($150 * 2)

• Non-Covered Amount & Non-Covered Hours - When looking at time entries, if for whatever reason your ConnectWise sees that time entry as not covered, we put those time entries in the non-covered section. NOTICE: Any time that is marked as non-covered is not used in factoring your utilization. We assume that if this time is marked as non-covered, you are billing for this amount separately to cancel it out. 

• Effective Hourly Rate - This calculation takes the Adjusted Amount and divides by the number of covered hours during that month to give you the hourly rate (Example: $6,045 / 48.25 = $125.28). By knowing your hourly rate, you will know if that rate needs to be adjusted because it is too high or too low. 


• Utilization - To calculate the monthly utilization, we take the Covered Amount and divide by the Adjusted Amount (Example: $5,410.01 / $6,045 = 89.5%). We have setup a default color range to help you see whether you are working too much or too little for any particular client:  
  

                  Red                     Yellow                 Green                     Yellow                         Red
           30% or lower          31% - 49%          50% - 110%          110% - 120%          120% and higher

Notice: If your utilization is over 100%, that doesn't mean your necessarily losing money. This percentage is simply saying that if this client was charged hourly, you would be making more money that you are now.

• Gross Margin Dollars - This is the dollar amount of profit that you are making on this particular agreement. To calculate this amount, we take your agreement amount (both labor and non labor) and subtract the hourly cost of your engineers. If you haven't properly set the hourly cost of each engineer then your gross margin might not accurately reflect the real amount.  

Example:

Agreement Amount: $6,695
Product Costs: $845
Labor Cost: $1,896.35
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Gross Margin Dollars: $6,695 - ($845 + $1,896.35) = $3,953.65 in December 2017

• Gross Margin Percentage - This is the percentage of profit compared to the monthly agreement amount of that client. This percentage can be used to see how much cushion each agreement has built-in, how many hours it takes to break even, and what is a healthy range to stay within. 

Example:

Agreement Amount: $3,953.65
Gross Margin Dollar: $6,695
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Gross Margin Percentage - 59.05%

By default, each gross margin percentage will go by this color range:

        Red                    Yellow                    Green                    Yellow                    Red
 39% or lower          40% - 44%             45% - 65%            66% - 70%        71% and higher   

• Adjusted Amount / Users - This calculation is to figure out the monthly seat price of your agreements based on the number of users at that client. This is a good way to see how much your numbers fluctuate while adding or removing users.  (Example: $8,500 / 45 Users = $188.33 per user)


• Adjusted Amount / Devices - This calculation is to figure out the monthly seat price of your agreements based on the number of devices at that client. This is a good way to see how much your numbers fluctuate while adding or removing devices.    (Example: $8,500 / 45 Devices = $188.33 per device)


• Breakeven Price  (Users) - This calculation is to figure out the seat price of your agreements based on the number of users and the time that you completed for that client. This is a good way to see how much your numbers fluctuate while adding or removing users and having more or less covered work.   (Example: $3,500 / 45 Users = $77.78 per user)
  


• Breakeven Price (Devices) - This calculation is to figure out the monthly seat price of your agreements based on the number of devices at that client. This is a good way to see how much your numbers fluctuate while adding or removing devices.     (Example: $3,500 / 45 Devices = $77.78 per device)