If a contractor charges $200/hr, how much is the actual staff salary?

[Anonymous]

So let's say my company is charging the federal government 190 an hour for my time, or 400k a year. I sit at the gov facility and don't even have a company desk or computer. What should my salary be? So intake the charge rate and divide by the wrap rate to get my total compensation? I'm at a small company too, like 70 people with very little overhead.

[Anonymous]

Honest question...why don’t people who work for contractors become their own subs and charge their own rates? I know a few people who have done this who don’t seem to have particularly specialized skill sets except that the client liked their work.

[Anonymous]

Anonymous wrote:I have seen various bill rates vs pay rates (I work in an area dealing with temp/vendor pay), and generally, it's about 30 to 40% markup.

The biggest offendors are the large firms like Accenture and DT. They bill at $400/hour and pay the actual person doing the work (not a PM) about $80K/yr, which amounts to like $40/hr.

It's insane. Those big consulting firms are just money makers, and the worker bees who are actually good at what they do eventually go independent or to smaller boutique firms that pay them more. The ones who stay on longer term are not the best or they end up as the salesperson. The turnover in those firms is super high. I dislike these large firms. They just bilk their clients and produce shoddy work. I'm on a periphery project that is working with two huge consulting firms now, and their work prouct is crap, but management wants them, so, we just have to deal.

Upper management and the big honchos in the consulting firm will pat themselves on the back for a job well done, but the actual workers will be left holding the bag of the crappy results.

No wonder Deloitte and Accenture have been losing a lot of federal contracts recently. They really can't compete with the competitive rates other contractors are charging and Deloitte don't even bring best brains in the business.

PS: I am only talking about federal contracting

[Anonymous]

Anonymous wrote:

Anonymous wrote:For Federal or commercial?

For Federal, there’s probably 20% profit built in on top of their fully loaded cost (which includes their salary, benefits, and corporate overhead like real estate, and back office staff). Working at a big corp, I was always surprised at how high that fully loaded cost was. An employee’s direct salary might only be 30% of the billed rate.

Commercial has higher profit margins.

Which contract supports 20% profit? It's more like 8%!
Federal Govt contracting sucks sometimes.

Highest is in cybersecurity or intelligence which could be anywhere in between 12-15%.

[Anonymous]

Anonymous wrote:I have seen various bill rates vs pay rates (I work in an area dealing with temp/vendor pay), and generally, it's about 30 to 40% markup.

The biggest offendors are the large firms like Accenture and DT. They bill at $400/hour and pay the actual person doing the work (not a PM) about $80K/yr, which amounts to like $40/hr.

It's insane. Those big consulting firms are just money makers, and the worker bees who are actually good at what they do eventually go independent or to smaller boutique firms that pay them more. The ones who stay on longer term are not the best or they end up as the salesperson. The turnover in those firms is super high. I dislike these large firms. They just bilk their clients and produce shoddy work. I'm on a periphery project that is working with two huge consulting firms now, and their work prouct is crap, but management wants them, so, we just have to deal.

Upper management and the big honchos in the consulting firm will pat themselves on the back for a job well done, but the actual workers will be left holding the bag of the crappy results.

I was going to say consulting firms aim to pay no more than 38%. So for $200 bill rate the salary would be $158k maximum but they could also be paying $80k. It is all about corporate profit.

[Anonymous]

Anonymous wrote:Wrap rate in DC for fed contractors can go from 1.58 to maybe 1.85 or so. Some of the bigger dogs have wraps well above 2.

That is a low multiplier. I would say 2.3 - 2.5.
Take the $200 multiply it by 2080. Then divid by 1.8 to 2.5. That is probably the range that the person is making. Probably around 200k.
If it is not federal, the multiplier could be well over 3.0.
You also have to determine if they are billing actuals or per job description. Typically, unless negotiated, they aren't billing actuals so you can ignore the above. If they are billing by job category, they can bill 200/hr and pay you $20/hr so that they have profit as long as you have the years and degrees. It is cut throat.
Just negotiate what is fair and learn to bring in contracts.