How much of this moolah should be mine?

May 28, 2010 4:34 PM

I work for a small (<40 people) specialized consulting firm. What should I be paid? My time is billed to clients at $150/hour. How much of that should I be seeing?

Currently about 80-90% of my time is billable, with 10-20% as overhead. I work about 50 hours a week most of the time, if that matters.

Of that $150/hour that the clients pay the company for my time, how much should I be paid? What's industry norm?

posted by anonymous to Work & Money (16 answers total)

What kind of consulting? IT? Software Development? Organizational? Industrial communication? I think it matters. Based on your rate, I'm going to assume IT. In that case, I'd say around 50%, but you should expect a bonus.
posted by jeffamaphone at 4:49 PM on May 28, 2010 [1 favorite]

Though if it makes you feel better, I once had I job where I was billed at $125/hr and got paid $10/hr.
posted by jeffamaphone at 4:50 PM on May 28, 2010

I think it probably depends on what industry you're in, but when I was working for a civil engineering company, I believe they billed about three times what the person was paid. So a $15/hr secretary was billed at $45/hr.

In the USA, the general rule is that whatever they're paying you, you're costing them nearly twice that much because of benefits, unemployment insurance, workman's comp, etc. Then they have to cover overhead - not just utilities and rent, but salaries for the payroll people, bookkeepers, administrative people, etc.
posted by MexicanYenta at 5:02 PM on May 28, 2010 [3 favorites]

Billing rates have to account for not only your overhead costs but also spread the overhead costs of everyone in the company who isn't billable over the billable people, as well as RESO costs, IT costs, etc. You may be able to get a rough sense from other people in other companies, but don't take any of it as directly applicable to your current company's financial position.
posted by jacquilynne at 5:03 PM on May 28, 2010

For many industries the rule of thumb is 1/3 to timekeeper (you), 1/3 to overhead, and 1/3 to profit (the firm). Whether this is true for you, I couldn't say. If you are salaried, you will usually get less than 1/3.

For example, now I bill by the hour but am paid salary. I get 20% to 25% or so of my billing rate, sometimes less. A few years ago in a different job I billed by the hour and was paid a straight 1/3 of amounts collected.
posted by ohio at 5:07 PM on May 28, 2010 [1 favorite]

In the USA, the general rule is that whatever they're paying you, you're costing them nearly twice that much because of benefits, unemployment insurance, workman's comp, etc.

That's a bit high this markup is generally estimated at about 20-30% of salary. That being said billing at 2-3x sounds about right for what I do (interactive app development - people with a high skill level) I can't really speak for any other industries.
posted by bitdamaged at 5:10 PM on May 28, 2010

Industry norm without specifying an industry is particularly tricky to nail down. I run a web development company that bills people out at between $90-$125/hr. They typically see between $20-$30/hr. (They're salaried.) My friend is an auditor for a big four. She's billed out at $200/hr. She sees $30/hr.
posted by disillusioned at 5:10 PM on May 28, 2010

A lot of other people have covered it, but yes... anywhere between 1/5 to 1/3 of your billable rate is usually what your get in consulting.
posted by jeanmari at 5:46 PM on May 28, 2010

To give you another idea of how it works outside of IT, etc (though the answers above are right one with what I know in IT)... the guy at my local chain Firestone autoshop makes about $22 per hour to start as a mechanic, but the shop's labor charge is $95 an hour for labor, $110 for diagnostic labor, so that's 5 times as much.
posted by Brian Puccio at 6:25 PM on May 28, 2010

Mid-level IT consultants in my previous industry generally saw roughly $60 an hour of the roughly $240 we charged. So call it 1/4 of your billable rate. For somebody billed at $150 figure they'd see $40, or about $80k a year.
posted by charlesv at 6:25 PM on May 28, 2010

At both of my entry-level jobs in consulting (communications/PR consulting, if it matters), I made between 1/6 to 1/4 of my billable rate.
posted by samthemander at 7:04 PM on May 28, 2010

In IT hardware, we have to bill at least double our salary to break even. Anything more than that is profit. 10-20% overhead seems low to me unless you get no benefits.
posted by gjc at 7:38 PM on May 28, 2010

My time is billed at about 4 times what I see in salary (healthcare/pharma-related consulting).
posted by acridrabbit at 8:27 PM on May 28, 2010

I suspect I'm billed out at about twice my salary (but that's an educated guess). Until I negotiated a large-ish raise, the bill rate would have been about 2.45 times my salary. That said, I put in 10-20 hours unpaid overtime per week, so my actually hourly rate is lower.
posted by orthogonality at 11:11 PM on May 28, 2010

FWIW in an answer above, garage 'hours worked' are determined by a book, rather than the actual time spent on task. Firestone is probably collecting more per hour than their stated rate.
posted by zippy at 11:16 PM on May 28, 2010

In my first web development job my time was billed at £60ph and I got £6. The senior web developer/technical director got somewhere between £6-10 depending on how many extra hours he had to put in (he was salaried)
posted by missmagenta at 11:35 PM on May 28, 2010