Tools, Licences and the Per-Head Costs
Everything bought per person rather than per hour: what belongs here, why the divisor matters so much, and the part-timer trap.
What one desk costs before anybody does any work, per year
Laptop and accessories over a three-year cycle.
The line that has grown fastest.
Contract plus data.
Trade-dependent; this is an office figure.
Per person, annual.
About £2.02 per chargeable hour.
Licences are 46 per cent of the layer and the largest single item. Divided over 1,284 chargeable hours it is £2.02; over a part-timer's 770 it is £3.36, for identical costs. One employer's own figures, not a benchmark.
Per-head costs are everything bought for a person rather than for an hour: a laptop, software licences, a phone, tools, protective equipment, a desk's worth of furniture, professional subscriptions and registrations. They are fixed per person and they are divided by that person's chargeable hours, which makes the divisor unusually important here.
The calculation in “Tools, Licences and the Per-Head Costs” depends on reliable source records as well as a documented accounting rule. For organisations researching productivity software for business, tools for productivity software for business can supply consistent time and project context, while the allocation basis and financial interpretation remain decisions for the organisation and its advisers.
A part-timer carries the same licence cost as a full-timer and has half the hours to spread it over.
The assumptions behind “Tools, Licences and the Per-Head Costs” can also be checked against official Scrum Guide. Record which guidance applies to the real workflow and which points require professional advice.
What belongs in this layer
Hardware and its replacement cycle. Software licences, per seat. Mobile and connectivity. Tools and their replacement. Protective clothing. Professional body fees and registrations. Vehicle, where assigned to a person.
- Hardware and its replacement cycle.
- Software licences, per seat.
- Mobile and connectivity.
- Tools and their replacement; protective clothing.
- Professional body fees and registrations.
- A vehicle, where assigned to a person.
Seven families. The second has grown fastest and is usually understated.
What does not belong
Anything shared rather than assigned: premises, shared machinery, central systems, management. Those are overhead and they are spread on a base, which is a different mechanism with its own section here.
Mixing the two means a change in headcount moves costs that should not move.
Annualising capital items
A laptop on a three-year cycle is a third of its cost per year, plus whatever the organisation's convention is for accessories and support.
Charging the whole cost in the year of purchase makes one year's rate jump and the next two look cheap, for no reason connected to the work.
Software licences
The line that has quietly tripled in most operations. Per-seat subscriptions, charged annually, often held centrally and invisible to the team that uses them.
Getting the per-seat figure usually requires asking whoever owns the contracts, and the total is frequently larger than anybody expected.
Licences that are not per head
Some are per concurrent user, some per device, some site-wide. A site-wide licence is overhead; a named-user licence is per head.
The distinction decides whether adding a person adds cost, which is the whole reason the layer exists.
The part-time divisor
A person working three days carries the same laptop, the same licences and the same registration, over three-fifths of the hours.
Per-head costs are therefore materially higher per hour for part-time staff, and a single blended rate across a mixed team understates the cost of the part-time hours and overstates the full-time ones.
Whether to rate part-timers separately
Where part-time is a small share, a blend is adequate and should be stated as a blend. Where it is a third or more of the workforce, two rates are more honest and not much more work.
The test is whether anybody is making decisions that the blend would mislead.
Turnover and the replacement cycle
Equipment outlives people. A three-year laptop cycle in a workforce with two-year average tenure means equipment is reassigned rather than replaced, and the real annual cost is lower than the cycle suggests.
Using the purchase cycle rather than the actual replacement rate overstates this layer.
Where the data lives
In four places: asset register, IT procurement, the licence contracts and expenses. None of them is organised per person by default.
Assembling it once takes a day and the figure is stable enough to be reviewed annually rather than rebuilt.
The surprising total
In knowledge work this layer is frequently larger than employer pension contributions, and nobody expects that. In trades it can be larger still once tools and protective equipment are counted properly.
It is the layer most often estimated and least often measured.
The licence nobody cancelled
Per-head costs attach to people and persist after them. A leaver's licences, subscriptions and phone contract continue unless somebody actively stops them.
An annual reconciliation of licence seats against current headcount is a half-hour query that typically finds several per cent of this layer being paid for people who left. It is also the only way the layer gets smaller.
Shared equipment that is really per head
The reverse case: a pool of devices or tools that in practice is one each. Called shared, it is treated as overhead; used as assigned, it scales with headcount.
The test is whether adding a person requires adding one. If it does, it belongs here regardless of what the asset register calls it.
The per-head line
"Per-head costs: £1.47 per chargeable hour, from the asset register and licence contracts, March, annualised over replacement cycles."
Amount, sources, date and basis. Four facts, one line, and it is the line that gets questioned most and holds up best when it has them.