The pricing structure described here is only used for Service Items (time) and Plain Items (purchases and materials) in Project Budgets, Quotations and Time Sheets, and for Service Items in Activities. You can also register Service and Plain Items can also be registered against Projects using Purchase Invoices and Expenses. In these cases, the structure will not be used. Instead, the price charged to the Customer will be calculated using the following methods:

If you select the Purchase Invoice or Expense amount plus Item Markup option in the Project Item Handling setting, the price charged to the Customer will be calculated by adding the Markup % of the Item to the Purchase Invoice or Expense amount.
If you select the Base Price plus Item Markup option in the Project Item Handling setting and the No Price from Project Budget option in the Project Settings setting, the price charged to the Customer will be calculated by adding the Markup % of the Item to the Price from the Price List specified in the Contact record for the Customer or to the Base Price of the Item.
If you select the Base Price plus Item Markup option in the Project Item Handling setting but do not select the No Price from Project Budget option in the Project Settings setting, the price charged to the Customer will be taken from the Project Budget. If the Item is not included in the Project Budget, the price charged to the Customer will be the Price from the Price List specified in the Contact record for the Customer or the Base Price of the Item.

In the case of time, you will probably use Purchase Invoices when you need to register work that has been sub-contracted. Under the first method, this work will be charged to the Customer at the rate charged to your company, plus a margin. Under the second and third methods, this work will be charged to the Customer at a standard rate that is independent of the rate charged to you by the sub-contractor.

In the case of materials and purchases, prices will be calculated in two different ways, depending on whether they were registered using Time Sheets, or using Purchase Invoices and Expense records. For this reason, it is recommended that you use one method or the other consistently, whichever is the more appropriate to your circumstances. To help with this aim of consistency, you can prevent the use of materials and purchases in Time Sheets by deselecting the Allow Plain Items on Time Sheets option in the Project Item Handling setting.

The cost of Plain and Service Items where the originating record is a Purchase Invoice or an Expenses record can be the unit cost as calculated from the originating record, or it can be the Cost Price of the Item, taken from the 'Costs' card of the Item record. This choice depends on the Use Item Cost Price from Purch. Inv/Expenses option in the Project Settings setting.

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Terminology, Pricing and Costs in the Job Costing module:

Introduction
Terminology
Pricing and Costs, including:
- Pricing and Costs - Time, Purchases and Materials from Time Sheets and Activities
- Pricing and Costs - Time, Purchases and Materials from Purchase Invoices and Expenses
- Pricing and Costs - Stocked Items

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