# 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 in the **Modifiers** window, opened with the **%** button in the estimate toolbar, next to Print. It opens as a window over the estimate grid — the Live Margins sidebar stays visible beside it, so you can watch totals move as you adjust — split into three sections: **Discount**, **Fringes**, and **Markups**. Add new ones with **Add Fringe** and **Add Markup**. Fringes and markups are both 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. > [!note] > Don't confuse the Modifiers window with the **Markups / Fringes / Discounts** view in the estimate view strip. The window is where modifiers are created and their percentages set; the view is a saved arrangement of the estimate grid that surfaces the modifier columns, for applying what you've created across line items. See [Estimate Views](./Estimate-Views.md). --- ## 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 **Markups** row 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 the Markups row 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 Window Is Structured Each modifier in the window — whether a Fringe or Markup — displays: - **Name** — with a color swatch matching its pill in the grid, a pencil icon to rename it, and a scope badge underneath: **Global** when it applies across the estimate, or a count (e.g. **3 Items**) when it's scoped to specific lines - **External side**: Subtotal, Percent, Amount - **Options**: Passthrough (and for Markups, Apply to Fringes) - **Internal side**: Subtotal, Percent, Amount - **Margin**: $ and % - A delete icon to remove the modifier 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. > [!important] > **In-House lines are excluded from internal modifier calculations.** A staff member's internal rate is treated as the all-inclusive cost of that labor to your organization — taxes, benefits, and overhead are already baked in — so PAI does not layer internal fringes or markups on top of it, which would double-count. A modifier's **internal** subtotal therefore sums only Out-of-Pocket line subtotals; In-House lines contribute nothing to it. The **external** side is unaffected: you can still bill the client a fringe or markup on in-house labor exactly as you would on vendor spend. ### Example — a 20% modifier on two identical $100 / $100 lines | Line Resource Type | External modifier | Internal modifier | |---|---|---| | In-House | $20 | $0 | | Out-of-Pocket | $20 | $20 | Both lines take the 20% on the external side. The In-House line's internal side is skipped — its $100 internal rate already represents the full cost to the org — while the Out-of-Pocket line takes it on both. --- ## 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. Passthrough fringes are included in that base too: passthrough means the client pays the fringe at cost, not that the fringe is excluded from markups. A passthrough fringe on an In-House line is always $0 (internal fringes never apply to In-House lines), so it adds nothing to the base. --- ## Discounts Discounts come in two forms, and both live on the external side only. **Line item discounts** apply per line, to that line's external subtotal. Show the **Disc. (%)** column in the estimate grid (hidden by default) to set them. **The project discount** is set in the Discount section at the top of the Modifiers window — a single percentage applied across the estimate. The section shows the arithmetic as you go: the **Subtotal** it's working from, your **Project Discount** percentage, the **Effective Discount** and **Discount** amount that produces, and the resulting **Discounted Subtotal**. Treat the project discount as a modifier like any other: it's a percentage adjustment that changes the base every markup then calculates against, which is why it sits in this window rather than off in the totals. ### Discounts and markup calculation Discounted subtotals are what markups calculate against. 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. Fringes also calculate on the discounted subtotal: a 20% fringe on that $1,000 line with a 10% discount is $180, not $200. A Passthrough fringe is the exception in effect: it charges the client the internal fringe amount, and the internal side is never discounted. --- ## Working with Modifiers in Sheet View The Modifiers window 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. Click the field to open a checklist of every fringe and markup on the estimate — check or uncheck to apply or remove one — or type in **Search or Create** to find one, or to create a new fringe on the spot. The **Markups / Fringes / Discounts** view puts this field up front alongside **Disc. (%)** and the external and internal fringe columns. > [!note] > Creating a modifier from the line item field only works for fringes; new markups are created in the Modifiers window. Either kind can be applied or removed from the field. After creating a fringe via the field, open Modifiers 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. When you subgroup, only the top-level header keeps the Modifiers field — in the default views, that's the **Resource Type** header; nested headers beneath it (Category, Department) don't show it. To manage modifiers by category or department, group by that field alone. ### Inheritance Modifiers created globally in the Modifiers window apply to every line item by default — including lines you add later, which pick up global modifiers as they're created. 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. Every modifier from your organization defaults and from estimation carries over to the budget. You can also create a new fringe from an expense line's **Fringes** field in the budget. It's applied to that line and added to the project's modifiers, so you can add it to other expense lines too. Its percentage is set once for the project and stays in sync on every line it's applied to — change it, and every one of those lines recalculates. For setting up organization-level default modifiers that pre-populate on new estimates, see [Default Modifiers](../01-Organization-Setup/Default-Modifiers.md).