Sorry if this is a repeat of a previous thread, but I was wondering how much people get billed out for by their offices? Or if most people know this information at all.
I get billed out for $125/ hr. I make between 10-15% of this. is this typical, ethical?
seems to be that one is typically billed out at 2 to 4 times your hourly wage. when i was making $17 an hour i was billed out at $50 to $60. don't know now and don't care to know, actually!
i'm salaried, but assuming i divide it into a 40 hour week (ha)... i make a little more than $17 an hour... saw the billing once for me and it was like $80... so that's... about 21-22%
let's not forget that the hourly rate you get billed out at has to cover your wage, vacation time, non-billable time, sick time, medical insurance, all other insurances, rent, utilities, lawyers, accountants, office supplies, hardware, software, and more. and yes this includes profit. these expense are huge to a business.
personally i'm more concerned with the AMOUNT of money that is coming to me than the percentage of fee. as far as i'm concerned, my firm can make all the profit they want.
the only time i've ever been concerned with how much my firm charges per hour is when my boss has agreed to a miniscule flat fee and i don't have enough allotted time to turn on my computer, much less think or draft.
side note: if your boss ever tells you "draw faster" -- leave. especially if he buys a "company car" with the profit you're making him and then, um, never lets anyone else in the "company" drive it.
personally i'm more concerned with the AMOUNT of money that is coming to me than the percentage of fee. as far as i'm concerned, my firm can make all the profit they want.
the only time i've ever been concerned with how much my firm charges per hour is when my boss has agreed to a miniscule flat fee and i don't have enough allotted time to turn on my computer, much less think or draft.
side note: if your boss ever tells you "draw faster" -- leave. especially if he buys a "company car" with the profit you're making him and then, um, never lets anyone else in the "company" drive it.
I think evaluating your pay based on a % of your billable rate isn't the best method. Every company has varying costs of overhead. Do you work in a fancy downtown office space? Does the company spend a lot of resources on marketing and other non-billable time? Do you have the latest and greatest computers and technology? If you are only get 10% and you work out of someone's basement on a commodore 64, then I'd say you are getting taken advantage of.
I've worked in an office that spent tens of thousands on marketing. Several thousand per employee each year. That's when I wasn't even making $20/hr and was billed at $100. I knew where the overhead was going. Then again, if I went across town it's not like I would've made more at the time. It's all relative.
For every $100 of Net Revenue, the typical architectural firm will incur about $35 for Direct Labor (i.e. the cost of labor chargeable to a project) and about $53 to cover Overhead (i.e. rent, the receptionist, professional liability insurance, computers, health insurance, paid vacation, etc.) leaving about $12 to cover profit, retirement plans, bonuses for the staff and distributions to the owners of the firm.
So, if your hourly wage is $20, then the firm must invoice your time at no less $46 an hour just to break even and at about $57 in order to make an industry average profit.
If your firm works with clients mostly on a fixed-fee basis, your "hourly billing rate" may be irrelevant, except for additional services work (which firm's often invoice on an hourly basis.) On fixed fee work, your ability to produce useful results efficiently is a much more important indicator of your value to the firm than is your billing rate.
I agree with j, you're probably getting hosed -- PROVIDED that a) your firm actually bills your clients for every hour you charge to the project; or b) if you're working on fixed-fee projects, that you're working productively and producing a reasonable amount of accurate, useable work.
However, if you're taking 3-days to produce a drawing that colleagues with comparable experience are routinely producing in one day, then you may not be getting hosed, after all.
Fairness in compensation is fundamentally about productivity ... and contribution.
oh I know I'm getting hosed, but i wanted to know if this was normal in our industry. and if i tell you more details, you will tell me i am getting ripped off even more. thanks for the feedback.
The client is getting hosed if you are not worth 125/hr. - - - but this includes your firms insurance, marketing, collection department, accountant, lawyer, book keeper, dead wood, etc.
If you can say that the client is getting hosed then you can say you are. Otherwise, things are just about right.
Billing rate shouldn't matter if its a small or large office. In a small office its even more important to have a 3x + billing multiplier. I think what's more important is that with fewer staff you need to keep a higher % of the staff billing out. I try and keep my staff of 4 billing about 90-95% of their time. I have a junior person who is probably closer to about 60% as they do more internal admin stuff if I can't get to it. I also try and keep my time pretty efficient and try and bill 70% of my time. It was quite a bit lower a few years back but I find that if I can bill out more time the office is much more liquid. ie if I'm away for a week or so I do notice the cash flow / billings drops substanially at the end of the month. In a large office there is just so many more staff working on things that can't be billed out.
For me its about finding a balance of income from billings vs the size of the office, I have found often that larger projects and more work in the office doesn't equal higher billings. I also think that there are thresholds where economies of scale can be gained or lost and each office needs to find the mix that gives them that magic balance of creative work, income, and work environment we all idealize.
Sep 30, 05 8:05 pm ·
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how much do you get billed out for?
Sorry if this is a repeat of a previous thread, but I was wondering how much people get billed out for by their offices? Or if most people know this information at all.
I get billed out for $125/ hr. I make between 10-15% of this. is this typical, ethical?
that seems like a low % of your billable rate...i get around %25-30
seems to be that one is typically billed out at 2 to 4 times your hourly wage. when i was making $17 an hour i was billed out at $50 to $60. don't know now and don't care to know, actually!
i'm salaried, but assuming i divide it into a 40 hour week (ha)... i make a little more than $17 an hour... saw the billing once for me and it was like $80... so that's... about 21-22%
i'm fine with it.
let's not forget that the hourly rate you get billed out at has to cover your wage, vacation time, non-billable time, sick time, medical insurance, all other insurances, rent, utilities, lawyers, accountants, office supplies, hardware, software, and more. and yes this includes profit. these expense are huge to a business.
10% of your rate seems a bit unreasonable.
personally i'm more concerned with the AMOUNT of money that is coming to me than the percentage of fee. as far as i'm concerned, my firm can make all the profit they want.
the only time i've ever been concerned with how much my firm charges per hour is when my boss has agreed to a miniscule flat fee and i don't have enough allotted time to turn on my computer, much less think or draft.
side note: if your boss ever tells you "draw faster" -- leave. especially if he buys a "company car" with the profit you're making him and then, um, never lets anyone else in the "company" drive it.
personally i'm more concerned with the AMOUNT of money that is coming to me than the percentage of fee. as far as i'm concerned, my firm can make all the profit they want.
the only time i've ever been concerned with how much my firm charges per hour is when my boss has agreed to a miniscule flat fee and i don't have enough allotted time to turn on my computer, much less think or draft.
side note: if your boss ever tells you "draw faster" -- leave. especially if he buys a "company car" with the profit you're making him and then, um, never lets anyone else in the "company" drive it.
slow computer, sorry.
I think evaluating your pay based on a % of your billable rate isn't the best method. Every company has varying costs of overhead. Do you work in a fancy downtown office space? Does the company spend a lot of resources on marketing and other non-billable time? Do you have the latest and greatest computers and technology? If you are only get 10% and you work out of someone's basement on a commodore 64, then I'd say you are getting taken advantage of.
I've worked in an office that spent tens of thousands on marketing. Several thousand per employee each year. That's when I wasn't even making $20/hr and was billed at $100. I knew where the overhead was going. Then again, if I went across town it's not like I would've made more at the time. It's all relative.
Hmmmm ... let's think about this a little bit ...
For every $100 of Net Revenue, the typical architectural firm will incur about $35 for Direct Labor (i.e. the cost of labor chargeable to a project) and about $53 to cover Overhead (i.e. rent, the receptionist, professional liability insurance, computers, health insurance, paid vacation, etc.) leaving about $12 to cover profit, retirement plans, bonuses for the staff and distributions to the owners of the firm.
So, if your hourly wage is $20, then the firm must invoice your time at no less $46 an hour just to break even and at about $57 in order to make an industry average profit.
If your firm works with clients mostly on a fixed-fee basis, your "hourly billing rate" may be irrelevant, except for additional services work (which firm's often invoice on an hourly basis.) On fixed fee work, your ability to produce useful results efficiently is a much more important indicator of your value to the firm than is your billing rate.
I agree with j, you're probably getting hosed -- PROVIDED that a) your firm actually bills your clients for every hour you charge to the project; or b) if you're working on fixed-fee projects, that you're working productively and producing a reasonable amount of accurate, useable work.
However, if you're taking 3-days to produce a drawing that colleagues with comparable experience are routinely producing in one day, then you may not be getting hosed, after all.
Fairness in compensation is fundamentally about productivity ... and contribution.
oh I know I'm getting hosed, but i wanted to know if this was normal in our industry. and if i tell you more details, you will tell me i am getting ripped off even more. thanks for the feedback.
$125/hr
roughly 40%...of rate
$150/hr depending of the type of work but i get none of it i work for the man (aka government)
Great thread benny.
The client is getting hosed if you are not worth 125/hr. - - - but this includes your firms insurance, marketing, collection department, accountant, lawyer, book keeper, dead wood, etc.
If you can say that the client is getting hosed then you can say you are. Otherwise, things are just about right.
Doesn't the billing rate vary with the type of practice as well, such as a corporate firm or a studio office?
Billing rate shouldn't matter if its a small or large office. In a small office its even more important to have a 3x + billing multiplier. I think what's more important is that with fewer staff you need to keep a higher % of the staff billing out. I try and keep my staff of 4 billing about 90-95% of their time. I have a junior person who is probably closer to about 60% as they do more internal admin stuff if I can't get to it. I also try and keep my time pretty efficient and try and bill 70% of my time. It was quite a bit lower a few years back but I find that if I can bill out more time the office is much more liquid. ie if I'm away for a week or so I do notice the cash flow / billings drops substanially at the end of the month. In a large office there is just so many more staff working on things that can't be billed out.
For me its about finding a balance of income from billings vs the size of the office, I have found often that larger projects and more work in the office doesn't equal higher billings. I also think that there are thresholds where economies of scale can be gained or lost and each office needs to find the mix that gives them that magic balance of creative work, income, and work environment we all idealize.
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