> ## Documentation Index
> Fetch the complete documentation index at: https://docs.spicom.co/llms.txt
> Use this file to discover all available pages before exploring further.

# Workforce Cost

> Understand how Spicom calculates the real monthly cost of your team and how it is allocated across contracts.

# Workforce Cost

The Workforce Cost engine calculates the **real monthly cost** of every person involved in client delivery — employees, freelancers, contractors, and founders.

This cost is then allocated across contracts based on **real working days**, using a fixed reference of **20 working days per month**, ensuring accurate margin computation.

<Callout type="info">
  Workforce cost updates automatically whenever you modify salaries, freelance rates, or day allocations.
</Callout>

***

## What Is Workforce Cost?

Workforce cost represents the **true cost** of producing client work.\
It includes:

* Salaries or freelance payments
* Employer contributions (for employees)
* Optional overhead
* Optional tools & equipment
* Any monthly recurring contributor cost

This gives you a realistic understanding of how expensive it is to deliver each contract.

***

## Real Cost Calculation

Each person has a **real monthly cost**, depending on their employment type.

### Employees

Real cost includes:

* Gross salary
* Employer taxes & contributions
* Optional overhead
* Optional tools/equipment

Formula:

```text theme={null}
real_cost = salary + (salary * charges_rate) + overhead + tools
```

Example

```text theme={null}
salary = 4000
charges_rate = 0.28
overhead = 200

real_cost = 4000 + (4000 * 0.28) + 200 = €5,320 / month
```

Freelancers

Simple and direct:

```text theme={null}
real_cost = daily_rate * days_per_month
```

Example:

```text theme={null}
450 €/day * 10 days = €4,500 / month
```

## Workload Allocation (Days-Based)

In Spicom, workload allocation is based on number of days worked per contract, using a fixed reference of 20 working days per month.

This ensures contract-level costs reflect actual work distribution.

### How It Works

Each workforce member specifies:
Their real monthly cost
Days worked per contract (e.g., 5 days/month on Contract A)
Total available days → always 20 days/month
Spicom computes:

```text theme={null}
allocation_percentage = days_on_contract / 20
allocated_cost = real_monthly_cost * allocation_percentage
```

Example

A developer costs €5,320/month, and works:

5 days → Contract A
7 days → Contract B
8 days → Contract C
Total = 20 days

##### Contract A

```text theme={null}
allocation % = 5 / 20 = 25%
allocated_cost = 5320 * 0.25 = €1,330
```

##### Contract B

```text theme={null}
allocation_percentage = 5 / 20 = 25%
allocated_cost = 5320 * 0.25 = €1,330
```

##### Contract C

```text theme={null}
allocation_percentage = 8 / 20 = 40%
allocated_cost = 5320 * 0.40 = €2,128
```

If Total Days \< 20

Example: a designer works 15 days total this month:

5 days → Contract A → 25%
10 days → Contract B → 50%
5 unused days → internal (not billed)

<Callout type="warning"> Unused days dilute margin because part of the workforce cost is not allocated to client work. </Callout>

Workforce Cost in the Dashboard

The dashboard displays:
Total Workforce Cost
Allocated cost per contract
Cost redistribution in simulations
Impact on 12-month forecasts

Everything updates automatically when you modify workforce data or contract allocation.

## Example Breakdown

| Workforce Member | Real Cost | Days Allocated | Deliverable Cost | Contracts | Cost per Contract   |
| ---------------- | --------- | -------------- | ---------------- | --------- | ------------------- |
| Developer A      | €5,320    | 20 days        | €5,320           | 3         | Distributed by days |
| Designer B       | €3,900    | 15 days        | €2,925           | 2         | Distributed by days |

Why This Matters

Because workforce cost is the biggest expense in service businesses, days-based allocation:

* Matches real operational planning
* Accurately reflects who works where
* Shows true profitability per client
* Highlights underused or overloaded staff
  -Supports trustworthy business decisions

Best Practices

* Update days worked monthly or when responsibilities shift
* Keep day allocations realistic
* Add yourself (founder) with a fair monthly cost
* Avoid pushing to 20 days artificially — track unused days honestly
* Combine with Global Costs for full margin accuracy