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# What is billable rate?

robhaw

I have been reading several threads where the term is mentioned, but I don't understand the concept and I would kindly like to ask for an explanation of the term, as well as its consequences on the practical aspects of running a practice, hiring staff, projet resourcing etc.

Thank you for your time. :)

Non Sequitur

How  can you function in the real world without knowing what this means?  We covered this stuff in undergrad... and again in grad school

Anyways, billable rate, in a nutshell, is the \$/hr you charge a client for your services.  The amount can be a flat rate (ie. \$100/hr for CA services) or it can vary depending on the task and, more importantly, who in the office is on the clock.  A partner's billable rate can easily be 3-5 times that of regular staff.

The above is obviously if you're billing your client per the hour.  For example, Non-Seq worked 80hrs @ \$200 per because he's a cape-wearing superstar... so that's a cool 16k, dear client, for his monthly contribution.  However, Jawknee fucked the dog for only  12hrs @ \$8.42, so we'll also include \$101.04 to to this month's invoice.

Billable rates are also used to determine fixed fee proposals and are typically 3 or 4 times the staff's wages.  I have a project at the moment (fixed fee) where my billing rate is 9times my base wages.  Profit!

Fixed fee contracts are different animals because the client is often billed for a % of the total fee.  This % is based on amount completed as opposed to time spent.  We prefer fixed because it's easier to control deliverables and sets a nice cost benchmark.

pandahut

Non-Sec, you are a savage. Also in addition, when you say your billing rate is 9x, is that similar to the billing rate formula below? I too am still learning about all of this.

Billing Rate defined by: (pay + taxes = employee’s base salary) + (benefits + overhead + profit) = billing rate
Often calculations are simplified by using a Net Multiplier.

Net Multiplier defined by: net revenue (exclud. consultant and reimbursable) ÷ direct labor = net multiplier
The Net Multiplier includes: benefits, indirect labor, overhead, profit. Most architecture firm’s net multiplier is from 2.7 to 3.

Billing Rate Formula using Net Multiplier of 3: \$40/hr x multiplier of 3 = \$120/hr billing rate

Non Sequitur

Panda, my 9x project is because we were sole-sourced for a multi-phase renovation project and did not technically need/want to job so we put in a very large bid but the client accepted the proposal... so since it's an easy FIXED FEE project, I can strategize my time efficiently which raises office profits (and increases billing rate). We would not make any money had this project been billed hourly. Just don't tell the client this.

I think this particular project's January bill will be the equivalent of \$800/hr billing rate... note that those are dirty Canadian communist dollars and hours.

pandahut

Ah very interesting. Glad you guys are getting fed and I see about renovation, definitely tricky I am on a project now that is a reno and multi-phased as well. Headache all around..... Good old Trudeau Tendies.

Stasis

Billable rates are used in T&M contract types too. T&M's only good if the scopes aren't clearly defined and you can't estimate the amount of work.., or some clients or your company only choose this contract type... Most clients would ask for fee tables for T&M contract and each invoice would have to show the hours expended on the job, so it's hard to fudge the fee (well, you can fudge the hours expended but the clients may crack you down). Typically, T&M only allows you to profit out of the margins added on the raw rates... Some contracts are under T&M with NTE, my least favorite.. You cannot go over the cap (unless there are change orders) or you lose the rest of the contract sum if you don't charge 100% of the hours included in your contract.. Under LS, you can run your team efficiently and take the rest of the contract sum as the profit.. For example, I once charged a \$1M change order, but only spent \$450K. Since this was LS, I kept the rest..

robhaw  wrote:

"I have been reading several threads where the term is mentioned, but I don't understand the concept and I would kindly like to ask for an explanation of the term, as well as its consequences on the practical aspects of running a practice, hiring staff, projet resourcing etc."

So you want the internet to tell you how to run a firm.   Easy.

Non Sequitur

Chad, I’ve read many threads but I can’t quite seem to get a grasp of this underpants collection centre. Could you kindly explain and also provide me with directions using public transit?

Non-ASD

The uncouth Chad, typically an asshole to everyone.

Only to those that deserve it Non-ASD. Only to those that deserve it.

Non Sequitur - First you need to find some gnomes. I'd look to your local AIG for where to find them. Second - you need to realize that gnomes are very short and not able to use even ADA compliant public transportation. You're going to have to budget some form of transportation for the gnomes. Regarding an underpants collection center - that is the easy part. Gnomes are very good excavators. They will easily dig out their own cave. Make sure to contact your AHJ as this type of construction is typically limited in location and size due to the lingering methane deposits on said underpants.

robhaw

FYI, I am in graduate school and was looking forward to having a productive discussion. However, I can see that Chad and Non Sequitur are being assholes as usual, is the easy way to behave online when you don't manners.

bowling_ball

It's the rate at which your time is billed out to clients. How each firm arrives at this number is up to them, but it iSight covers salary, overhead, and profit. It can get way more complicated but NS is right, it's typically about 3 to 4 times your hourly salaried wage. "Billable Rate" isn't solely an architecture thing - all professions will have some version of this, which can be very easily googled.

bowling_ball

iSight = NS. Stupid autocorrect

graphemic

Sure, people on the internet suck. But I'm not sure what kind of discussion you're looking for? You asked for the definition of a very basic term that could be answered by any professional practice textbook. A productive discussion glossaries do not make.

Non Sequitur

Ain't no assholes in here. We gave you excellent information even though it's super easy stuff to figure out. Kids these days... lazy wankers.

robhaw - as said before - this isn't a complex subject. You could of found an answer in 30 seconds with an online search.

Then again you wanted us to anwer:

"explanation of the term, as well as its consequences on the practical aspects of running a practice, hiring staff, projet resourcing etc."

This to me sounds like you're asking to do an assignment for you.That's why I didn't give you a detailed answer.  Non Sequitur did give you detailed answer.

It seems to me that you're saying we're being assholes because we didn't do your assignment for you.

Grow up.

architecturepinecone

The billable rate can vary depending on many factors, including the type and size of project, the complexity of the project, the experience of the architect, and the location of the project. Generally, billable rates range from \$60 to \$220 per hour.

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