Pay rate and bill rate are two of the most commonly confused terms in Modge. They are not the same thing. Getting this right matters for both payroll and client billing.
The simple definition
Pay rate is what you pay your member per hour
Bill rate is what you charge a client per hour for that member’s time
For most agencies and consultancies, bill rate is higher than pay rate. The difference is your gross margin on that hour.
Where each lives
Pay rate
Pay rate is set on a member’s profile, on the Finance tab. It is organization-wide by default and used when running payroll.
[screenshot of the Finance tab on a member profile]
Pay rates can also be set at the project level for the Member bill rate billing type, but conceptually pay rate is about your relationship with the employee, not the project.
Bill rate
Bill rate is set per project:
For Pay rate billing type: bill rate is not used; the project just uses pay rate (so internal cost only)
For Member bill rate billing type: each member has a per-project bill rate (used to calculate client invoices)
For Project rate billing type: one bill rate for everyone on the project
How both flow through Modge
When a timesheet entry is approved:
The current pay rate for that member is locked into the entry. This is the number used for payroll exports.
The current bill rate (per billing type) is also locked in. This is what gets sent to client billing.
[diagram showing pay rate and bill rate flowing into timesheet entries at approval time]
Locking the rates means past timesheets do not change when you adjust rates today. See Locked rates.
What if you only need internal tracking
If you do not bill clients and just want to track time and payroll cost, leave every project at the Pay rate billing type. You will not see any bill rate UI.
What if you only need client billing
If you are a freelancer who does not run formal payroll for yourself, set pay rates to 0 and use bill rates for everything. The Profitability report shows revenue minus zero cost, which is fine for this use case.
Where each appears
Pay rates: Payroll exports, Profitability report (cost side), member finance tab
Bill rates: Client invoices, Profitability report (revenue side), project member tab