Can you break down the components of the 40% difference between TCO and base pay? I'm guessing this is a US number; wondering how it would vary in other countries.
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It depends on location (and type of employee / rough salary range) in the US, too, but you'll generally hear it quoted at 25~40%. I pick the conservative one.
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Concur: For professional services, typical billing rate is ~3x salary of person whose time is being sold. That no one has succeeded in scaling a consulting business with less markup (even though they would do very well) suggests it’s hard to do better.
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Curious how
#s change when factoring in the enormously higher defined contribution (solo 401k/SEP IRA) and benefit plan (personal pension) contributions possible for 1099.Thanks. Twitter will use this to make your timeline better. UndoUndo
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If you work this backwards, from “I can get a developer for $100k/yr”, you’ve re-derived cost-based pricing, which is not how a well-managed company prices offerings.
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Patrick, it depends a lot on the type of consulting you do, and the sales model. i.e. are you selling yourself? Rule of thumb, a consulting firm will need to make >50% gross margin on billable hours. So, if you expect 70% billable hours, A salary of ~115k is appropriate on $165/h
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Should have a utilization bonus that drives your wage up as you approach or exceed 2000 hours a year.
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Why is the discourse about fairness less interesting? Surely we should care more about that as an industry, no?
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