Overheads and Pricing

The Commercial Research and Consultancy Services Policy can be accessed here, as a PDF file. It is recommended that staff intending to conduct any such service become familiar with the Policy and direct any queries to the Research Innovation and Development Office ['RIDO'].

Click here to go back to the main Commercial Research and Consultancy Services page.

This webpage explains policy on the charging of overheads for contract and commercial research and for consultancies and includes notes on pricing for commercial projects and daily charge-out rates. Overheads for research grants are covered elsewhere.

Overhead costs are designed to cover the real infrastructure costs of the University - they are neither an ad hoc levy nor a profit component. A list of some of those infrastructure costs is presented in the Policy, at section 8.3(b).

One third of a project's overheads are returned to your School. Schools differ as to their policies on how those funds are used or distributed. The remaining two thirds are kept centrally, to cover general University infrastructure costs (eg. for insurance).

Overheads should be charged on contract and commercial research and consultancy services to ensure full cost recovery.

1. Waiving of Overheads.

The Pro-Vice-Chancellor (Research & Innovation) has sole authority to grant a waiver or reduction of overheads .

Such approval must be sought prior to coming to any agreement on terms with the client - approval will not be given after the event.

There are some types of contract research funding where overheads may be waived:

• Charitable Groups and Community Organisations:

  Some small charitable groups and community organisations have limited resources and if their objects are philanthropic the University may be prepared to exempt their funding from overheads or to agree to lower than standard overheads.

• Funds in support of Research Students:

  The University may exempt contract research funding that supports a research student from the overheads requirement, or agree to reduced overheads, but only if:

  • the research funds are primarily for the support of the student (eg. through payment of a stipend or project costs) and
  • the work being undertaken contributes directly to the student’s thesis.

Applicants MUST contact RIDO prior to submitting a proposal to a client if they are not clear if overheads should or should not be included, or if a waiver can be sought. Formal approval of a waiver of overheads must be obtained from the Pro-Vice-Chancellor (Research and Innovation) and be appended to the Application Cover Sheet when it is forwarded to RIDO for processing.

Under no circumstances will any element of the infrastructure charge be waived for consultancies.

Under no circumstances will infrastructure charges be waived retrospectively.

2. Budgeting for Overheads.

The inclusion of an overheads component in a contract or commercial research or consultancy budget is more complex than it is with grants. Note that whereas with most grant funding chief investigator time is not costed, all salary costs must be included in the budget for contract or commercial research and consultancies - all direct costs must be covered.

• For most projects salaries will form the bulk of the costs, and overheads are calculated on their basis. Other items (equipment, etc) can be priced according to actual costs.

  • If you are pricing a project using actual salary costs, you should, at the absolute minimum, apply a multiplier of 1.25 to the sub-total of salary + salary on-costs to cover the overheads component. For example: if the salaries cost (including salary on-costs) is $10,000, the minimum overheads you can allow for is $2,500. Whether or not you present this component separately - and preferably as an "Infrastructure Charge" - or as part of the total salary costs depends on your client audience.

    If overheads are not identified as a separate line in your budget they will be levied at the rate of 20% of the "total salary" (which will be assumed to include an overheads component). So, in our example if the salary bill is presented as "$12,500" and there is no separate overheads line, 20% of $12,500 - or $2,500 - will be levied, leaving $10,000 for the project and its salaries.

  • If you are using a daily (charge-out) rate (as per the Policy) an overheads component is already included, and will be levied at 20% of the total charged-out salary rate.

• Where salaries form a less than substantial component of your total price you should charge for overheads using a multiplier of at least 1.15 (and preferably higher) of the total project cost.

• Where the total price is a lump sum (there is no budgetary breakdown) - and it is not unusual with consultancies for a client to offer a lump sum - the price will be treated as if it is for salaries only, ie. overheads will be levied at 20% of the total sum.

The Policy, in part 9, provides useful details and examples.

3. Profits - Competitive Pricing - Commercial Rates

It is important to note that this infrastructure charge does not include a profit component - it only covers some of our indirect costs. Standard commercial prices allow for profits, as do JCU's charge-out rates, and it is appropriate for most commercial research projects and consultancies to include a profit component in your price. JCU is obliged under National Competition Policy to price competitively in the market.

Do not undervalue your services.

Higher than standard overhead charges should be included in the project cost where:

• the University provides particularly costly and specialist services and/or infrastructure in support of the project; or
• the project has significant commercial potential for the client.

In either case you are strongly advised to contact RIDO for advice before providing quotes to a client.

4. Recommended Minimum Daily Charge-Out Rates

Position	Daily Rate
Professor or A/Professor [E/D]	$1,350
Senior Lecturer [C]	$1,100
Lecturer [B]	$950
Associate Lecturer [A]	$800

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If you have any queries regarding the content of the Policy, or any of the matters noted above, contact Jasper Taylor, Director Research Services (x 4422) or Jim Campbell, Research Legal Officer (x 5238) .