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

[Anonymous]

I am looking at a large contracting company. The hourly staff charges are around $200/hr. I know the company does not actually pay their employees that much, but what percentage of the hourly charge is the actual salary?

[Anonymous]

Who cares

[Anonymous]

The people working in your house are getting between $10 and $25/hour.

[Anonymous]

Depends on overhead cost and so many other things. You cannot deduce any arbitrary info from whatever you may read in the posts that follow. Best to consider the local market rate for industry/function and assume it is competitive.

[Anonymous]

I have a friend that bills $500-1000 depending on the markwt; his salary is the same. Market rate includes adjustment for corporate taxes and payroll taxes.

You always make more employing so that overhead includes your profit margin. Sometimes it is commiserate with the assumed risk. This is why it is outrageously high in Fortune 500 companies and white glove firms

[Anonymous]

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.

[Anonymous]

When I was a federal contractor 15 years ago my billing rate was about $175/hour. I was paid about $42/hour.

The goal of every project manager is to figure out how to get a job slot classified as a highly accomplished, supreme subject matter expert with decades of experience in a very specific field of expertise ($$$). And then fill that slot with some kid just a couple years out of school (cheap).

[Anonymous]

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.

[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.

That was my big company's profit target for fixed price contracts that I managed, and it was well below the required margin for our commercial counterparts. We also generally didn't fire people when a contract was lost (unless it was gigantic..$10s of millions). A small business with a few staff augmentation contracts can have an 8% profit because they just fire anyone that doesn't have an assigned contract seat. But they also generally aren't charging $200/hr though.

[Anonymous]

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.

[Anonymous]

If a federal contractor in the DC area, $200 fully loaded rate probably is about $125K to $150K/year, assuming paid leave, 401k matching, etc.

[Anonymous]

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.

[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.

Most of those big dog consulting firms charge the government $200 plus per hour and end up paying much lower with junior level folks. The advantage they have is that those firms have deep benches to draw from. Small businesses do not.

[Anonymous]

Anonymous wrote:The people working in your house are getting between $10 and $25/hour.

This, and many aren’t paying taxes at that level.

[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.

This was my experience. Client work was supporting the big partner salaries, fancy offices, and internal employees. Meanwhile, I'm expected to bill long hours for a salary that's less than what I could be making elsewhere working 40 hours I week. I was also surprised by the lack of focus on quality. It was more important to look good than to be good. And our fed managers frequently didn't have the time, expertise, or desire to call our leadership on it.