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

# Overview

> How billing and pricing works in CharleOS

CharleOS uses a value-based billing approach with flexible retainer plans. The model rewards efficiency, protects clients from overages, and provides transparency through task-based billing.

## Core Principles

<CardGroup cols={2}>
  <Card title="Value Over Time" icon="gem">
    Clients pay for deliverables and value, not raw timesheets
  </Card>

  <Card title="Cost Certainty" icon="lock">
    Every task has a maximum cost cap—clients never pay more than quoted
  </Card>

  <Card title="Efficiency Rewarded" icon="bolt">
    Faster delivery creates margin, incentivizing quality and speed
  </Card>

  <Card title="Transparent Tracking" icon="eye">
    Real-time visibility into hours used and remaining
  </Card>
</CardGroup>

## How It Works

The billing system has three key components that work together:

<Steps>
  <Step title="Retainer Plans">
    Clients subscribe to monthly retainer plans that define:

    * **Monthly hours**: Allocated capacity for work (e.g., 60 hours/month)
    * **Monthly cost**: Fixed retainer fee (e.g., £5,000/month)
    * **Day rate**: Calculated profitability metric (cost ÷ hours)

    Plans can be customized per client with overrides for special arrangements.
  </Step>

  <Step title="Value-Based Billing">
    Work is estimated using t-shirt sizes (XS, S, M, L, XL, XXL) with time ranges. A billing formula determines what's chargeable:

    **Formula:** `Billable = MIN(max, MAX(average, actual))`

    This means:

    * Finish **faster than average** → Bill the average (keep the efficiency)
    * Finish **within the range** → Bill actual time
    * Go **over the maximum** → Bill the max (absorb the overage)
  </Step>

  <Step title="Real-Time Consumption">
    As work is logged, billable hours (not raw time) are deducted from the monthly allocation. Clients see their remaining hours update in real-time.
  </Step>
</Steps>

## Example: How a Month Works

Here's how billing flows through a typical month:

**Client: Acme Corp**

* **Retainer Plan**: Growth (60 hours/month, £5,000/month)
* **After PM deduction** (15%): 51 hours available for work

### Week 1: Homepage Redesign

* **Quoted**: M (3-6 hours, average 4.5 hours)
* **Actual**: Completed in 3.5 hours
* **Billable**: 4.5 hours (formula: MIN(6, MAX(4.5, 3.5)) = 4.5)
* **Result**: 1 hour banked (efficiency gain)
* **Remaining**: 46.5 hours

### Week 2: Product Page Update

* **Quoted**: S (1-2 hours, average 1.5 hours)
* **Actual**: Took 2.5 hours (over maximum)
* **Billable**: 2 hours (formula: MIN(2, MAX(1.5, 2.5)) = 2)
* **Result**: 0.5 hours overage (absorbed by agency)
* **Remaining**: 44.5 hours

### Week 3: Blog Integration

* **Quoted**: L (8-16 hours, average 12 hours)
* **Actual**: Took 14 hours (within range)
* **Billable**: 14 hours (formula: MIN(16, MAX(12, 14)) = 14)
* **Result**: On target
* **Remaining**: 30.5 hours

**Month-End Summary:**

* Hours used: 20.5 hours
* Hours remaining: 30.5 hours
* Efficiency: Net +0.5 hours banked
* Client pays: £5,000 (fixed retainer fee)

## Key Concepts Explained

### Billable vs. Logged Time

<Tabs>
  <Tab title="Billable Time">
    **What counts toward the retainer allocation**

    Calculated using the billing formula—this is what's deducted from monthly hours.

    Example: Task quoted at 4.5 hrs, completed in 3 hrs → Billable: 4.5 hrs
  </Tab>

  <Tab title="Logged Time">
    **Raw time entries by the team**

    Used internally for capacity planning and efficiency tracking, but not what clients are charged.

    Example: Developer logs 3 hrs, but client is billed 4.5 hrs (the average)
  </Tab>
</Tabs>

### Banked Time vs. Overage

<CardGroup cols={2}>
  <Card title="Banked Time" icon="piggy-bank">
    **When actual less than average**

    The efficiency gain when work is completed faster than the quoted average. This creates profit margin.

    Example: Quoted 4.5 hrs, delivered in 3 hrs = 1.5 hrs banked
  </Card>

  <Card title="Overage" icon="triangle-exclamation">
    **When actual greater than maximum**

    Non-billable time absorbed by the agency when work exceeds the quoted maximum. Clients are protected from overruns.

    Example: Max 6 hrs, took 7 hrs = 1 hr overage (absorbed)
  </Card>
</CardGroup>

### PM Deduction

**15% of monthly hours are reserved for project management overhead.**

This covers:

* Sprint planning
* Client communication
* Status updates
* Scope management
* QA coordination

**Example:**

* Raw allocation: 60 hours/month
* PM deduction: 9 hours (15%)
* Net available: 51 hours for deliverable work

<Info>
  PM time is deducted upfront from the total monthly hours, not added to individual task estimates. This provides predictable overhead without inflating task quotes.
</Info>

## What Clients See

Clients have full transparency into their retainer usage:

<AccordionGroup>
  <Accordion title="Monthly Allocation" icon="gauge">
    * Total hours allocated
    * Hours used (billable time, not raw logged)
    * Hours remaining
    * Utilization percentage
  </Accordion>

  <Accordion title="Task-Level Detail" icon="list-check">
    * Task name and description
    * Quoted estimate (t-shirt size range)
    * Status (in progress, complete, etc.)
    * Hours consumed (billable calculation)
  </Accordion>

  <Accordion title="What They Don't See" icon="eye-slash">
    Clients do **not** see:

    * Individual team member timesheets
    * Raw logged time vs billable time
    * Banked time or efficiency differentials
    * Internal capacity planning details

    This protects the value-based model and focuses clients on deliverables, not hours.
  </Accordion>
</AccordionGroup>

## Billing Scenarios

### Scenario 1: Under-Utilizing the Retainer

**Problem:** Client only uses 30 of 60 hours/month

**What happens:**

* Client pays full £5,000 retainer fee
* Unused hours expire (no rollover by default)
* CSM should discuss:
  * Reducing to a smaller plan
  * Finding opportunities to use remaining hours
  * Better scope planning

### Scenario 2: Over-Utilizing the Retainer

**Problem:** Client needs 70 hours but plan is 60 hours/month

**What happens:**

* Work continues beyond allocation
* Over-allocation is visible on client profile
* Billable hours still tracked accurately
* CSM discusses:
  * Upgrading to larger plan
  * Prioritizing work within allocation
  * Managing scope more tightly

<Note>
  There's no hard cap—work doesn't stop at 60 hours. Over-usage triggers conversation about upselling or scope management, but clients aren't blocked.
</Note>

### Scenario 3: Mixed Performance

**Problem:** Some tasks efficient, others over budget

**What happens:**

* Banked time and overage tracked per task
* Net efficiency calculated across all work
* Month-end reports show:
  * Which task types are efficient
  * Which are consistently over
  * Overall profitability

This data drives continuous improvement in estimation and delivery.

## How It Compares to Other Models

| Approach                   | How It Works             | Pros                                           | Cons                                         |
| -------------------------- | ------------------------ | ---------------------------------------------- | -------------------------------------------- |
| **Time & Materials**       | Bill exact hours logged  | Simple, no estimation needed                   | Unpredictable costs, no efficiency incentive |
| **Fixed Price**            | Single price for project | Cost certainty                                 | High risk for agency, disputes over scope    |
| **Value-Based (CharleOS)** | Formula with min/max cap | Efficiency rewarded, costs capped, transparent | Requires good estimation                     |

## Why This Model Works

<AccordionGroup>
  <Accordion title="For Clients" icon="building">
    **Predictability**: Maximum cost is always capped per task

    **Fairness**: Don't pay for the agency's learning curve or mistakes

    **Flexibility**: Monthly retainers provide consistent capacity without per-project negotiations

    **Transparency**: Real-time visibility into hours used and remaining
  </Accordion>

  <Accordion title="For the Agency" icon="chart-line">
    **Profit Margin**: Efficient delivery creates banked time that becomes profit

    **Better Estimation**: Over-runs hurt, so the team gets better at scoping

    **Client Retention**: Happy clients with predictable costs stay longer

    **Sustainable Growth**: Retainers provide recurring revenue for planning
  </Accordion>

  <Accordion title="For the Team" icon="users">
    **Quality Focus**: Efficiency is about smart work, not rushed work

    **Less Admin**: No need to justify every 15-minute increment

    **Clear Goals**: Task-based delivery with defined outcomes

    **Fair Compensation**: Team capacity is protected by the max cap
  </Accordion>
</AccordionGroup>

## Learn More

Dive deeper into each component of the billing system:

<CardGroup cols={2}>
  <Card title="Retainer Plans" icon="repeat" href="/concepts/billing/retainer-plans">
    How monthly retainer plans work, plan tiers, and client-specific overrides
  </Card>

  <Card title="Billing Model" icon="calculator" href="/concepts/billing/billing-model">
    Deep dive into the value-based billing formula and how it's calculated
  </Card>

  <Card title="Efficiency" icon="bolt" href="/concepts/financial/efficiency">
    How banked time and overage impact profitability and day rates
  </Card>

  <Card title="T-shirt Sizing" icon="ruler" href="/concepts/estimation/t-shirt-sizing">
    How work is estimated using size-based ranges
  </Card>
</CardGroup>