# Modifiers Once your line items are in place, Modifiers let you account for the percentage-based costs that sit on top of base rates — payroll taxes, workers' comp, insurance, production fees, agency commissions, contingencies. PAI handles these through the **Modifiers tab** in Sheet View, which is split into two sections: **Fringes** and **Markups**. Both types are percentage-based and both run on external and internal values independently. They differ in where the charge lands in the estimate and what base they calculate against. --- ## Fringes vs. Markups: Where the Charge Lands **Fringes** are absorbed into the line item. The fringe amount is added to the line total — each affected line shows the cost inclusive of the fringe. The client sees the charge embedded in the line. **Markups** do not change any line item total. They aggregate separately above the line level and appear in the **Job Fees** section of Live Margins only — not in any individual line total. ### Example — same 20% charge, two approaches **Fringe:** | | Value | |---|---| | Rate | $1,000 | | Subtotal | $1,000 | | Fringe (20%) | $200 | | **Line Total** | **$1,200** | | Line Totals | $1,200 | | **Grand Total** | **$1,200** | **Markup:** | | Value | |---|---| | Rate | $1,000 | | Subtotal | $1,000 | | Fringe on line | $0 | | **Line Total** | **$1,000** | | Line Totals | $1,000 | | Markup (20%) | $200 | | **Grand Total** | **$1,200** | Live Margins shows section line totals, not subtotals. In the fringe example the section total is $1,200. In the markup example it's $1,000, with the $200 appearing in Job Fees only. ### When to use each **Fringes** are suited to costs that belong to specific line items — payroll tax, workers' comp, pension, health and welfare. These are charges tied to the labor or resource they apply to, and it makes sense for them to be visible at the line level. **Markups** are suited to charges that apply at a higher level — a production fee, agency commission, or margin layer that doesn't belong to any single line. Keeping these separate from line totals lets you manage that layer independently. --- ## How the Modifiers Tab Is Structured Each modifier in the tab — whether a Fringe or Markup — displays: - **External side**: Subtotal, Percent, Amount - **Options**: Passthrough (and for Markups, Apply to Fringes) - **Internal side**: Subtotal, Percent, Amount - **Margin**: $ and % The **Subtotal** shown for each side is the sum of the external (or internal) line item subtotals the modifier applies to. Because line items can carry margin — meaning their external subtotal exceeds their internal subtotal — a modifier's external and internal subtotals can differ even before any percentages are set. This affects how modifier margin works. --- ## External and Internal Rates You set a percentage independently on each side. The combination determines what the modifier does financially: - **External > 0, Internal = 0** — adds to the client's bill without adding to your cost. The full external amount becomes modifier margin. - **External = Internal (same %)** — if both subtotals are equal, this is a true pass-through; the modifier adds cost on both sides equally with no margin. If the subtotals already differ (due to line item margin), applying the same percentage to both sides will generate modifier margin proportional to that difference. - **External = 0, Internal > 0** — internal cost tracked without billing the client. Doesn't appear on printed documents. ### Passthrough option The **Passthrough** checkbox sits in the Options column between the external and internal fields on every Fringe and Markup. Enabling it automatically floats the external percentage so that the external modifier *amount* matches the internal modifier amount — regardless of how different the two subtotals are. This is useful in situations where the modifier itself should produce no margin — for example, when bid specifications require costs to be passed through at actual, or when contractual terms set a pre-negotiated fee structure that prohibits line-level margin. It's also useful simply as a quick way to align the two sides without manually calculating what percentage achieves matching amounts. Modifiers (both fringes and markups) with a zero external amount do not appear on printed estimates. --- ## Markup-Specific Options ### Apply to Fringes Markups have an additional option: **Apply to Fringes**. When enabled, the markup's subtotal base shifts from line item subtotals to line item totals — meaning the markup calculates against amounts that already include any fringes applied to those lines. This lets you apply the markup percentage to fringe costs as well as base costs. ### Discounts and markup calculation Discounts in PAI apply per line item to the external subtotal. A line item with a $1,000 subtotal and a 10% discount has an effective external subtotal of $900. Markups use the discounted subtotal as their base — so a 10% markup on that line produces $90, not $100. When Apply to Fringes is also enabled, the base expands further to include fringes on top of the discounted subtotal. --- ## Working with Modifiers in Sheet View The Modifiers tab is where you create modifiers and set their percentages. But assigning modifiers to line items — and scoping them to specific groups — can also be done directly in Sheet View through the **Modifiers field**. ### The Modifiers field Every line item in Sheet View has a Modifiers field that shows which fringes and markups are currently applied to it, displayed as labeled pills. You can click the field to search existing modifiers and add or remove them, or start typing to create a new fringe on the spot. > [!note] > Adding modifiers via the line item field only works for fringes. Markups can only be created and managed from the Modifiers tab. After creating a fringe via the field, go to the Modifiers tab to set its external and internal percentages. ### Group-level assignment via grouping Sheet View uses PAI's table grouping controls to organize line items by category or department. When items are grouped, the group header row also shows a Modifiers field — displaying all fringes and markups present across any line item in the group, even if not all items share them. Adding a modifier to the group header applies it to every line item in that group at once. Removing it from the header removes it from all items in the group. This is the most efficient way to scope a modifier to a specific cost type — group by Category, then add or remove the modifier from the Labor or Equipment header rather than touching each line individually. > [!important] > Group-level modifier management only works with a single layer of grouping (category only, or department only). If you subgroup — for example, category and then department — the group header Modifiers field is not available. Stick to single-layer grouping when you need to manage modifiers by group. ### Inheritance Modifiers created globally in the Modifiers tab appear on all line items by default. From there, you can remove them from specific groups or individual lines as needed. The typical pattern is to configure your standard modifiers globally, then use group headers or line item fields to make targeted exceptions. --- ## How Modifiers Transfer to the Budget When an approved estimate converts to a budget, modifiers transfer as percentage relationships — not fixed amounts. If a fringe is 20% on a labor line and the labor rate changes in the budget, the fringe recalculates against the new rate automatically. New modifiers cannot be created in the budget. Only modifiers from your organization defaults and any created during estimation are available for budget expense lines. For setting up organization-level default modifiers that pre-populate on new estimates, see [Default Modifiers](../01-Organization-Setup/Default-Modifiers.md).