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How is a ProPay calculated when the budget is a contract price?

Walk through the math when the budget is a percentage of the contract value.

Purpose

This article explains how Protiv calculates a bonus when a job has a contract-price budget.

You'll see the formula, walk through a real example, and understand the difference between contract-price and hours-based bonuses.

When To Use This

Use this when:

  • You set up a job with budget type = Contract Price
  • You bill the customer a flat amount and want to incentivize coming in under labor cost
  • A worker asks how the math works on a fixed-price job

The Formula

For a contract-price ProPay:

Labor budget = Contract price × labor budget %
Actual labor cost = Total hours worked × combined wage rate
Saved labor = Labor budget - Actual labor cost
Bonus pool = Saved labor × split_job_savings %
Worker bonus = Bonus pool × pool split for that role

You set the labor budget % up-front. That's the labor portion you expect to pay on the job.

Worked Example

Job: Paint a 4-bedroom house.

Budget

  • Budget type: Contract Price
  • Contract price: $10,000
  • Labor budget %: 30%
  • Labor budget = $10,000 × 30% = $3,000
  • Crew: 3 workers averaging $20/hr (combined wage rate $60/hr)

Actual

  • Crew finishes in 40 hours
  • Actual labor cost = 40 hrs × $60/hr = $2,400

Saved labor

  • $3,000 budget - $2,400 actual = $600 saved

Split job savings

Your org splits savings 50/50:

  • Worker share = $600 × 50% = $300

Bonus pool split

Pool configured:

  • Crew: 60%
  • Crew lead: 20%
  • Manager: 10%
  • Company: 10%

The $300 worker share splits:

Per worker

3-person crew, equal_weighted distribution:

  • Worker A: $60
  • Worker B: $60
  • Worker C: $60
  • Crew lead: $60
  • Manager: $30

Why Use Contract Price?

Contract price is the right budget type when:

  • You quote customers a flat price per job
  • You don't track hours as the primary unit
  • You want to reward crews for finishing efficiently on fixed-price work

It's NOT the right type when:

  • Customers pay you for time and materials (use hours instead)
  • You don't have a labor budget % defined
  • Job scope changes mid-job (consider hours so the budget can be adjusted)

Where the Labor Budget % Comes From

The labor budget % is configured in your settings. It can be:

  • Org-wide — Same % applies to every contract-price job
  • Per branch — Different % per branch (common when branches have different cost structures)
  • Per division — Different % per division
  • Per job — Override on individual jobs

Common Mistakes & How To Fix Them

  • Bonus is way smaller than expected Check the labor budget %. If it's set to 25% but your actual labor on similar jobs runs 35%, you'll rarely see savings. Adjust the % to match reality.

  • Bonus is way bigger than expected Same issue, opposite direction. Tighten the labor budget % to a more accurate target.

  • Contract price changed mid-job Budget locks at ProPay creation. If the contract changes, you may need a budget adjustment. See the article on budget adjustments.

  • How is a ProPay calculated? (Hours budget type)
  • What are the 4 bonus distribution types?
  • How do I add missing budget info to a job?
  • How do bonus pools work?