Around 25%?

1/5 to 1/4 is the range you should expected as your take home hourly wage. The leftover is to cover office overhead, non billable staff, and corporate profits. 

You would do well to learn how much of your firms work is fixed fee or billed hourly.  Pretty much every office has an hourly rate sheet with some pretty high prices, but a much smaller percentage of us are consistently doing jobs for those rates.

If you think your firm is "charging high, paying low" and pocketing a big chunk of your billable rate as profit, you are probably wrong.

Also keep in mind that not every hour is actually billed to a project even if it is worked on a project. There are judgment calls made. 

I'm billed at $150/hr.  I bill approx 2000-2100 hours a year, and another 200 nonbillable.  So that's theoretically $300-315k.  They run our salaries off of 1750 billable hours.  I typically get a $4-5k bonus, which does not make up for the difference, and this year we won't be getting a typical winter bonus, though the summer $1k came through.  

Complications - sometimes we work deals for less than $150/hr and I often seem to get those...  sometimes we sign deals that cover less hours than we're going to take, which is a separate issue and treated differently, but could also be viewed as just working for less than $150/hr.  Sometimes (though rarely) we start on a project a couple weeks early and the deal goes south/unsigned... so I billed between 10-60 hours to something that'll never see money.

Billing multipliers typically range between 2.5 (for small 'lean & mean' firms) all the way up to 10 for some large or boutique firms.  I'd say most are in the 3-5 range--as suggested above.  (That includes myself).  Meaning, you can take your base hourly wage against the multiplier and arrive at a billing rate.  This assumes that most of the staff are around 90-95% billable.  Also accounts for admin staff (HR, marketing, accounting, reception) that are nearly all overhead.  Finally, it also covers fringe benefits and insurance.  I was once told that you can assume it costs a business nearly double your salary to keep you employed--with no profit.

Accountants will talk about multipliers. X=all expenses/payroll. It's more complex than that, but rule of thumb, muliplier of 4 is pretty damn good and under 3 not great. Kinda like batting averages in your beer league. 

Wild card, as mentioned above, is that not all your hard work ends up being billable. You are typically burning through a fixed fee, and whoever negotiated the owner/architect agreement made an educated guess on how much labor will be needed to complete a task. This is where a good PM makes all the difference in profitability. Nothing gets me more excited than hearing that there is no fee left before I even touched a project. Great job erryone!

First time I ever had the responsibility as a PA to budget out a job, I flipped out because I approached it as an architect assigning tasks w/ what i thought were reasonable times, not an owner chasing projects. I took my work to the partner in charge of the project. He kind of laughed and said work it out backwards cuz that's the fee we've got and no one wants to be here overtime if they don't have to.

Wake up call to the way money came in at that firm. It is kind of funny money in a way. The partners just had to bring in enough quantity to cover salaries & rent and everything else was gravy. Labor was the magical quantity that just happened.

We did in fact get the job done and didn't really lose any money because of it.

The typical direct labor multiplier (DLM) for an architecture firm is 3.0. What that means is that your hourly billing rate is typically targeted at being three times higher than your hourly direct salary cost to the firm.

That covers all the overhead associated with you being on payroll, additional firm overhead associated with operating as a business, plus whatever the firm's profit margin might be (usually 20 percent).

Some firms bill higher multipliers, some lower. Firms which do a lot of public projects tend to be lower, since governments cap rate multipliers below 3 in a lot of places (California is 2.6something?). Boutique or specialty firms may have higher multipliers.

Thanks for this thread! Are there any resources for benchmarking utilization rates and multipliers in the industry based on firm size that people use? Also, how about fees per region? We are a 100 person firm so a tweener. My instinct is that our multiplier is a bit low: 2.95 and for our market (Mid-Atlantic U.S.-Philly to North Carolina) our fees swing wildly. I'm a new studio leader and constantly wondering why there is such a lack of transparency on the business of architecture when everyone is happy to show all their wares on design.

I manage a practice within a large multinational AE firm. Our multipliers are rarely above 3.0. My target when going after the projects is 2.75-2.85, and closer to 3.0 for change order initiated by the client work. But, our salaries are above average in the industry, but we don't get year end bonuses (only various performance based bonuses, that are not that big). Billing rates vary from project to project, and there is no one answer what the salary should be, but in my practice, someone that I can bill at $140/hour on most projects would be be making $85K-$100K a year. At the same time, it is NEVER that all the billing rates are just perfect on the job. Some people have better DLM, some are at the loss - as long as I can get a good average, I am good. 

5x here in NYC for a small firm. But keep in mind we only bill additional services at this rate. A typical base fee for a project is a fixed lump sum or % of construction cost and the fee/hour can go waaaay down if we spend too much time on a job getting everything just so (which we are wont to do). Being able to actually charge the rates in our agreements is a rare benefit of perhaps the scope expanding or some other contingency.