By Derek Vaughn, project-accounting systems analyst with 9 years of experience reviewing service-business budgets, costs, and client billing
Last reviewed: July 22, 2026
FreshBooks business users sign in to create projects, track time and expenses, set billable and internal cost rates, and compare project income with recorded costs. Project Profitability is available on Premium and Select plans, so a missing profitability panel may reflect the subscription rather than a login failure.
This independent guide is not affiliated with FreshBooks.
Check the project setup first. Skip changing an invoice until the project’s billing method, cost rates, expense markup, and assigned records have been reviewed.
What FreshBooks Project Profitability Measures
FreshBooks projects organize client work, team time, invoices, and assigned expenses. Hourly projects can use a single hourly rate, team-member rates, or service rates, while Project Profitability adds internal cost rates and expense-markup controls.
Profitability compares project income with the costs recorded against that project.
The result depends on the data entered. An employee’s billable rate tells FreshBooks what the client may be charged, while the cost rate represents the business’s internal cost for that employee’s time. Those figures answer different questions.
A profitable-looking project can be misleading when team cost rates are absent, expenses were never assigned, or completed work remains unbilled. A project can also look weak while a major invoice is still in draft.
Numbers need context.
Choose the Correct FreshBooks Route
| Your task | Correct starting point |
|---|---|
| Manage the business | FreshBooks login |
| Create or edit client work | Projects |
| Set client-facing time rates | Project billing method |
| Record internal labor costs | Team cost rates |
| Add project spending | Assign expenses to the project |
| Charge expenses back to the client | Rebill expenses on an invoice |
| Review one project in detail | Profitability Details report |
| Compare several projects | Profitability Summary report |
| Review overall business profit | Profit and Loss report |
FreshBooks’ business login includes email and password entry plus Google and Apple sign-in.
Do this first: confirm the active business and project. Skip editing cost or billing rates when several similarly named client projects exist.
Log In to the Existing Business
Open FreshBooks through its company website and enter the credentials attached to the established account. A user with access to several businesses should verify the active company before creating a project or opening a profitability report.
A valid login is not enough.
The wrong company can contain a client with a similar name, familiar services, and plausible rates. Confirm the business name, project client, currency, and project status before making changes.
Do not create a replacement FreshBooks account because profitability is unavailable. A separate profile will not contain the original time entries, invoices, expenses, team assignments, or project history.
Priority one is the established business. Skip project corrections until it is open.
Create the Project With the Right Billing Method
FreshBooks projects can be configured around different billing methods. For an hourly project, the available methods include a single hourly rate, team-member rates, and service rates.
Choose based on how the client agreement prices the work.
Single Hourly Rate: Everyone’s billable time is charged at one project rate.
Team Member Rates: Different people can carry different client-facing rates.
Service Rates: The rate depends on the service performed rather than the individual worker.
That selection affects generated invoices and projected revenue. It does not automatically establish internal labor cost.
Review the contract before choosing. A project sold at one blended hourly rate should not be configured with separate team rates merely because several employees participate.
The wrong method may remain unnoticed until dozens of time entries have accumulated.
Check one sample. Skip bulk time entry until the expected invoice value is confirmed.
Billable Rates and Cost Rates Are Not the Same
A billable rate is the amount associated with charging the client for time. A cost rate represents what the team member’s work costs the business for profitability calculations. FreshBooks uses these figures to compare project revenue with labor costs.
Suppose a designer is billed to the client at $120 per hour but costs the business $52 per hour. Entering only the $120 billable rate may show project revenue, but profitability will not fully reflect the labor cost until the cost rate is configured.
Do not use salary divided by 2,080 hours without reviewing what the business wants the cost rate to represent. Payroll taxes, benefits, contractor fees, and overhead treatment can change the appropriate internal figure.
FreshBooks supplies the field. Management or an accountant determines the rate.
Set cost rates before relying on the margin. Skip treating a blank cost rate as zero-cost labor.
Assign Expenses to the Project
FreshBooks allows expenses to be associated with a client or a specific client project. Assigned expenses then contribute to the project’s recorded costs, whether or not the business later charges them back to the client.
This distinction is essential.
A project expense can be:
- non-billable and absorbed by the business;
- billable at its original amount;
- billable with a markup;
- recorded against the wrong client or project.
Travel, subcontractor work, materials, software purchases, and delivery charges can all affect margin when they belong to the engagement.
Review the expense’s client, project, date, category, amount, currency, and receipt. A correct receipt attached to the wrong project still creates an incorrect profitability result.
Do not assign every expense from one vendor to the same project automatically. One supplier may support several clients during the same month.
Rebill Client Expenses Correctly
FreshBooks rebills an expense by assigning it to a client or client project and then adding it to an invoice. The business may apply a markup and include the receipt image on the client invoice.
Rebilling is optional.
An expense can remain a project cost without being passed to the client. That might happen when the contract states that ordinary travel, software, or supplies are included in the agreed price.
When rebilling is appropriate, review:
- whether the contract permits it;
- the markup percentage;
- tax treatment;
- receipt visibility;
- the client-facing description;
- whether the expense was already added to another invoice.
FreshBooks notes that an expense-markup percentage selected for a project applies to expenses created afterward.
That timing can surprise users. A newly configured markup may not retroactively alter older project expenses.
Priority two is the unbilled-expense list. Skip adding expenses manually as custom invoice lines until you confirm whether FreshBooks already offers them for rebilling.
Read the Project Profitability View
Project Profitability uses project income and recorded costs to show the financial performance of the engagement. FreshBooks describes the feature as a way to review project income, costs, and profit using time, services, and expenses associated with the project.
Interpret it in stages.
First, confirm that all relevant time entries are attached to the project. Then check internal cost rates. Review assigned expenses. Confirm whether invoices are sent, draft, paid, or still missing.
A negative figure does not always mean the engagement should be abandoned. The project may be early, with costs recorded before the first milestone invoice. A positive result can also be premature when supplier bills or contractor time have not yet been entered.
Check the cutoff date.
A profitability view is only as current as the underlying records. Skip changing rates in response to one incomplete mid-project snapshot.
Profitability Details Versus Summary
FreshBooks provides two dedicated reports on Premium and Select plans.
The Profitability Details report gives a detailed breakdown for one project by services and expenses. Use it when investigating why a particular engagement earned or lost money.
The Profitability Summary report compares planned and actual project costs across projects. Use it to identify which engagements appear stronger or weaker relative to one another.
Do not substitute the general Profit and Loss report for either project report. Profit and Loss measures business-wide income and expenses over a selected period; it does not answer every question about one project’s labor and assigned costs.
Use Details for diagnosis. Use Summary for comparison.
Why a Project Looks Too Profitable
Four checks usually expose the problem.
Missing cost rates: Team time has billable value but little or no internal labor cost.
Unassigned expenses: Purchases exist in Expenses but are not linked to the project.
Unentered supplier bills: Work was received, but its cost is absent from FreshBooks.
Income timing: An invoice was generated while later costs have not yet been recorded.
Another possibility is that time was entered as non-billable but still incurred a labor cost. That can reduce project profit without increasing billable revenue.
Do not increase expenses artificially to force a margin that “looks realistic.” Correct the source records.
Why a Project Looks Unprofitable
The opposite result also needs investigation.
An invoice may remain in draft. Billable time may not have been generated onto an invoice. Expenses intended for another project may have been assigned here. An expense markup may be absent, or a team member’s cost rate may be overstated.
Check whether the project uses flat pricing or hourly billing. A flat-rate engagement can accumulate more labor hours than originally planned without creating additional client revenue.
That may be a real margin issue.
Review the client agreement before changing the invoice. Skip retroactively increasing rates unless the contract and client approval support the change.
FreshBooks FAQ
Is Project Profitability available on every plan?
No. FreshBooks lists it for Premium and Select plans.
What is the difference between a billable rate and cost rate?
The billable rate values time charged to the client. The cost rate estimates what that labor costs the business for profitability calculations.
Do all project expenses have to be billed to the client?
No. FreshBooks allows both billable and non-billable project expenses.
How do I charge a client for a project expense?
Assign the expense to the client or client project, then add it to an invoice. FreshBooks also allows a markup and receipt attachment.
Why did my new expense markup not change older expenses?
FreshBooks says the project markup applies the next time an expense is created for that project. Earlier records may require separate review.
Which report compares multiple projects?
The Profitability Summary report.
Which report explains one project in detail?
The Profitability Details report breaks one project down by services and expenses.
Why does project profit differ from Profit and Loss?
Project profitability focuses on records assigned to a specific project. Profit and Loss covers business-wide income and expenses for the selected period, so the scope and timing can differ.