Tracking hours is not the same as tracking costs. Many companies know how much time their team spent on a project, but not what it actually cost — or whether they ended up making or losing margin. With remote and hybrid teams, that gap widens: people in different locations, with different rates, working on multiple projects at the same time.
The outcome is predictable: projects that looked profitable in the initial budget end up in the red, and nobody notices until the client pays and the numbers don’t add up. The problem is not lack of effort — it is lack of visibility into what each hour of that effort actually cost.
A time tracking software like Hubstaff turns logged hours into real profitability data, in real time, without manual spreadsheets or end-of-month surprises. In this article we explain how to run that calculation, which metrics matter and how to set it up so the system does the work for you.
The real problem: logged hours, invisible margins
Most remote teams track hours in some way — in a spreadsheet, a task manager, personal notes, or rough end-of-week estimates. The problem is not missing data: it is that the data lives in isolation and never gets crossed with what actually matters.
Think of a typical project: three people work on it for three weeks. One is a senior with a high internal rate; another is mid-level with a medium rate; the third is an external contractor with an agreed hourly rate. Each one tracks hours differently. Did anyone cross those hours with individual costs and compare them against the price agreed with the client? In most cases, no — or someone in finance does it once the project has already closed.
That is the blind spot that kills margins. It is not a failed project due to lack of talent or effort: it is a project that was poorly measured. The solution is not working more hours — it is having visibility before it is too late to course-correct.
Billable vs. worked hours: the metric that defines your margin
Before talking about costs, there is a fundamental distinction to understand: not all the hours a team works can be charged to the client.
Billable hours are those directly attributable to the contracted work — design, development, consulting, customer support. Everything else — internal coordination meetings, scope changes not agreed with the client, administrative time, onboarding new team members — is real time that consumes resources but generates no direct revenue. It is called non-recoverable internal time, and in remote teams it tends to be higher than in in-person teams because asynchronous coordination has a cost.
Knowing that gap, project by project and client by client, is the first step to protecting margin. An agency that invoices a client for 100 hours but actually worked 140 hours on that project has a very different real margin than what shows up on the invoice. Hubstaff lets you mark which time is billable and which is not, and generates automatic reports with that breakdown — no manual calculation required.
- Billable time per project and client
- Non-recoverable internal time (coordination, revisions, admin)
- Gap between budgeted and actual hours
- Real cost vs. invoiced amount: the project’s true margin
How to calculate the real project cost step by step
The formula is simple, but applying it manually for a team of more than three people quickly becomes impractical. With Hubstaff the calculation is automatic; understanding the logic helps you configure it correctly from day one.
Step 1 — Assign a cost per hour to each team member: every member has an internal rate that may differ from what is billed to the client. In Hubstaff this is set per user and can be updated at any time.
Step 2 — Log time by project and task: Hubstaff does this automatically in the background once the team member starts the tracker. No manual input or reminders required.
Step 3 — Add indirect expenses if applicable: some projects have additional costs (licenses, tools, infrastructure) that can also be logged in Hubstaff to get the full real cost.
Step 4 — Cross hours × cost per hour + expenses: the result is the real project cost. Hubstaff displays it on the dashboard in real time, updated with every logged hour.
The final output is a concrete number: how much the project has cost so far, how much budget remains, and what the projected margin is if the team continues at its current pace.
Project budget: from reactive to preventive
Knowing a project’s cost after it ends is useful for learning. Knowing it while the project is live is what changes the outcome.
Hubstaff lets you set a project budget in two formats: by hours (e.g., 80 hours allocated) or by money (e.g., USD 4,000 maximum cost). Once configured, the system monitors progress in real time and sends automatic alerts to the manager when the team reaches a defined threshold — for example, 80% of the budget.
This shifts cost control from reactive to preventive. Instead of discovering the overrun at month close, the manager receives an early signal that allows action while there is still room to maneuver:
- Renegotiate scope with the client before continuing
- Reassign tasks to team members with lower cost per hour
- Adjust priorities and cut low-value work
- Proactively communicate to the client if the project has grown in scope
Without that alert, none of those decisions is possible in time. With it, the manager always knows where things stand.
H2: Profitability reports: what to measure and how often
Real-time visibility is needed to react. But historical visibility is what allows you to learn and improve pricing, estimating and resource allocation on future projects.
Hubstaff generates automatic reports that let you analyze profitability at different levels:
- By project: total cost, worked hours, billable hours, margin
- By client: cumulative profitability across all projects for that client
- By team member: productivity, logged hours and associated cost
- By period: week, month, quarter — comparisons to detect trends
These reports require no manual work: they are generated automatically and can be exported to share with the client, the finance team or investors. For teams billing clients by the hour, these reports are also the transparency evidence the client expects.
A good practice is to review project profitability at the close of each phase, not only at the end. That allows you to catch deviations early and adjust the estimate for the remaining work with real data instead of assumptions.
Highest-impact use cases: agencies, consultancies, BPOs and IT services
Companies that sell time — digital agencies, consultancies, design studios, managed IT services, BPOs, contact centers — benefit most from this visibility because their margins depend directly on the relationship between what they charge and what each hour of work costs.
For digital agencies, the most immediate impact is on pricing: with real historical data, they can estimate future projects more accurately, eliminate the risk of underestimating scope and make informed decisions about which clients are most profitable. They can also prove to the client, with concrete evidence, the work that was done.
For consultancies and professional studios, the advantage is in billing: with automatic timesheets linked to the project, generating an invoice goes from hours to minutes, and the chance of forgetting to bill for registered hours drops to zero.
For BPOs and contact centers, time measurement stops being internal control and becomes a commercial argument: they demonstrate productivity to the end client, meet SLAs with data and have the evidence to renegotiate contracts based on the team’s real effort.
For managed IT services, client-level visibility makes it possible to identify which accounts are profitable and which consume disproportionate resources, and to make pricing or scope decisions before renewing contracts.
Does this sound like your business? Schedule a free demo and see Hubstaff running with your own team’s numbers — privacy, costs, reports and integrations included.
Integrations with the tools you already use
One of the most common obstacles to adopting a new time tracking system is integration friction: if it does not connect with the tools the team already uses, it ends up as yet another system nobody keeps updated.
Hubstaff integrates natively with the most widely used project management and business tools in remote teams:
- Task managers: Asana, Trello, Jira, Monday.com, ClickUp, Basecamp
- Billing and accounting: QuickBooks, FreshBooks, Gusto, PayPal
- Communication: Slack (automatic notifications and reports)
- CRMs and sales tools: Salesforce, HubSpot
This means time is logged in the context of actual tasks — not as a separate activity — and data flows automatically to where it is needed: the billing system, the CRM, the payroll manager. Less manual work, fewer errors, more reliable data.
Checklist — is your company measuring costs correctly?
Before deciding whether you need a tool like this, answer these questions:
- Do you know what each project cost last quarter, not just how much you invoiced?
- Do you know the difference between invoiced hours and hours actually worked, per client?
- Do you get alerts when a project is about to exceed budget, or do you find out after the fact?
- Can you compare the profitability of two similar projects without building a spreadsheet from scratch?
- Are your cost and hours reports generated automatically, or does someone build them manually every week?
- Do your contractors and freelancers log time the same way your internal team does?
If you answered ‘no’ to two or more, you are leaving margin on the table. Hubstaff covers exactly those gaps — and the initial setup takes less than a day.
Try it free for 14 days, no credit card required. →
Frequently Asked Questions
| Why do remote teams often lose project margin? |
| Because they never cross-reference actual hours worked with individual costs and the agreed client price. Without that visibility, there is no way to know if a project was profitable until it is too late to fix it. With teams spread across different locations and rates, the problem compounds. |
| How do you calculate the real cost of a project? |
| Add up each team member’s hours multiplied by their cost per hour, plus any indirect expenses allocated to the project. Hubstaff automates that calculation in real time: just assign a rate per user and the system does the rest as the team logs time. |
| What is the difference between billable and worked hours? |
| Worked hours include all team time; billable hours are only those chargeable to the client. The gap — internal meetings, coordination, unplanned revisions — is real time that generates no revenue. Measuring it project by project is key to understanding true margin. |
| Can Hubstaff show project budget status in real time? |
| Yes. You can set a project budget in hours or money. The system shows live progress and sends automatic alerts when the team reaches the defined usage threshold, allowing action before the project goes over budget. |
| Is it useful for agencies with multiple clients? |
| It is one of the highest-impact use cases. Agencies can see real profitability per client, compare similar projects, identify which clients are most profitable and adjust pricing based on actual historical data instead of estimates. |
| Can it be used with external contractors and freelancers? |
| Yes. Hubstaff lets you add contractors to the team with differentiated rates, log their time the same way as internal staff and generate unified reports. It also simplifies automatic payments based on logged hours. |
