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As a management consultant, I was billed out at about $875/hr. My salary was about $50/hr. That's a ratio of about 18:1. This felt fair to me. The billing had t

As a management consultant, I was billed out at about $875/hr. My salary was about $50/hr. That's a ratio of about 18:1. This felt fair to me. The billing had to cover a lot more than my salary.

josephjrobison 8y ago
Now that is quite the markup. Can you provide details on what categories the billing would also cover? I'd imagine it would be flights, hotel rooms, equipment, transportation, meals, remote offices, etc.
- tedsanders 8y ago
  (Wish I could add this as an edit, but the 1 hour mark just passed.) Here's what that billing had to cover: * My normal work hours [the thing we billed for] * My overtime hours * My annual bonus * My benefits & retirement savings & overhead & employer-side taxes * My time spent on business development & sales (most of which don't pan out) * My time spent in training & development (probably ~4 weeks in the first year) * The time of managers spent training & developing me * My support staff (industry analysts, Powerpoint designers, internal experts) * Multi-million-dollar IT investments to build tools and databases to support me in my work * A couple first-class flights a week * A few nights a week at expensive hotels * Lyfts & Ubers everywhere * All meals expensed * The firm's partners working the case * New employees for whom we don't bill * Fees for market reports * Fees for expert interviews with industry executives * Office overhead (rent, power, insurance, etc.) * Office support staff (HR, finance, janitors, etc.) * Profits for the firm's equity holders (Now a few of these expenses were billed separately I believe, but it shows the wide breadth of costs that a firm has to cover.) Lastly, none of this opportunity would have existed without the firm, the network, the brand, and the partners. It's amazing to think that all I had to do was show up and work, and in exchange, I would get paid a high salary, get experience working with senior executives, get a prestigious brand on my resume, and accelerate my career relative to most career tracks. I don't regret the job, nor do I think it's surprising that there are crowds knocking on the door trying to get in. Looking at other industries, I wouldn't be surprised if a cashier at a grocery store made less than 5% of what they put in the register each day. And I wouldn't be surprised if a oil drilling engineer got paid 5% of oil that they extracted each day. Even if we're the ones touching the revenue, we're still a small part of what it takes to run a big business.
aantix 8y ago
How is that remotely fair? The company has the expectations for you to perform as an $800+/hr consultant, and your return for that effort is $50/hr?
- maxxxxx 8y ago
  It's definitely reality, fair or not.
- jenscow 8y ago
  There is a queue of people willing to perform the job for $50/hr. Also, there are overheads of running a company (assuming OP isn't the only employee).
- deleted 8y ago
  [deleted]
- tptacek 8y ago
  If they're reliably billing out at $800/hr to full-time utilization and feel they're being cheated in their take-home comp, they should set up shop on their own. They're a consultant, that's what consultants do. There's no easier structure in tech in which to compete with your erstwhile employer than in consulting. If they can't do that, whatever the reason they can't is the answer to your question.
  - unstatusthequo 8y ago
    Everyone is forgetting realization. What can you actually collect from end clients? What "discount rates" do certain companies get? That ~$800 is rack rate and after discounts, write offs/downs, you rarely realize that entire rate. Utilization is also important. If client doesn't allow charging for travel, and your talent is flying around, they aren't going to get high utilization. But when they are working the rate is higher.
- deleted 8y ago
  [deleted]
- ghaff 8y ago
onetimemanytime 8y ago
Fair might not be the right word, $825 an hour covers the rest and then some. The thing is that they can get away with charging that much, and based on your skills /competition at that time, $50 was a good rate for you to pocket.
DATACOMMANDER 8y ago
Wow. Your time was valuable enough to be billed at nearly a grand an hour, and you didn’t think you could do significant better than $50/h working for yourself? The other commenters in this thread seem to think that a ratio of roughly 3:1 is normal for a coder. Why do you think the difference is so huge?
- runako 8y ago
  > As a management consultant, Management consulting is a very different industry than (most) coding for hire.
deleted 8y ago
[deleted]

As a management consultant, I was billed out at about $875/hr. My salary was about $50/hr. That's a ratio of about 18:1. This felt fair to me. The billing had to cover a lot more than my salary.

josephjrobison 8y ago

Now that is quite the markup. Can you provide details on what categories the billing would also cover? I'd imagine it would be flights, hotel rooms, equipment, transportation, meals, remote offices, etc.

tedsanders 8y ago
(Wish I could add this as an edit, but the 1 hour mark just passed.) Here's what that billing had to cover: * My normal work hours [the thing we billed for] * My overtime hours * My annual bonus * My benefits & retirement savings & overhead & employer-side taxes * My time spent on business development & sales (most of which don't pan out) * My time spent in training & development (probably ~4 weeks in the first year) * The time of managers spent training & developing me * My support staff (industry analysts, Powerpoint designers, internal experts) * Multi-million-dollar IT investments to build tools and databases to support me in my work * A couple first-class flights a week * A few nights a week at expensive hotels * Lyfts & Ubers everywhere * All meals expensed * The firm's partners working the case * New employees for whom we don't bill * Fees for market reports * Fees for expert interviews with industry executives * Office overhead (rent, power, insurance, etc.) * Office support staff (HR, finance, janitors, etc.) * Profits for the firm's equity holders (Now a few of these expenses were billed separately I believe, but it shows the wide breadth of costs that a firm has to cover.) Lastly, none of this opportunity would have existed without the firm, the network, the brand, and the partners. It's amazing to think that all I had to do was show up and work, and in exchange, I would get paid a high salary, get experience working with senior executives, get a prestigious brand on my resume, and accelerate my career relative to most career tracks. I don't regret the job, nor do I think it's surprising that there are crowds knocking on the door trying to get in. Looking at other industries, I wouldn't be surprised if a cashier at a grocery store made less than 5% of what they put in the register each day. And I wouldn't be surprised if a oil drilling engineer got paid 5% of oil that they extracted each day. Even if we're the ones touching the revenue, we're still a small part of what it takes to run a big business.

aantix 8y ago

How is that remotely fair? The company has the expectations for you to perform as an $800+/hr consultant, and your return for that effort is $50/hr?

maxxxxx 8y ago
It's definitely reality, fair or not.
jenscow 8y ago
There is a queue of people willing to perform the job for $50/hr. Also, there are overheads of running a company (assuming OP isn't the only employee).
deleted 8y ago
[deleted]
tptacek 8y ago
If they're reliably billing out at $800/hr to full-time utilization and feel they're being cheated in their take-home comp, they should set up shop on their own. They're a consultant, that's what consultants do. There's no easier structure in tech in which to compete with your erstwhile employer than in consulting. If they can't do that, whatever the reason they can't is the answer to your question.
- unstatusthequo 8y ago
  Everyone is forgetting realization. What can you actually collect from end clients? What "discount rates" do certain companies get? That ~$800 is rack rate and after discounts, write offs/downs, you rarely realize that entire rate. Utilization is also important. If client doesn't allow charging for travel, and your talent is flying around, they aren't going to get high utilization. But when they are working the rate is higher.
deleted 8y ago
[deleted]
ghaff 8y ago

onetimemanytime 8y ago

Fair might not be the right word, $825 an hour covers the rest and then some. The thing is that they can get away with charging that much, and based on your skills /competition at that time, $50 was a good rate for you to pocket.

DATACOMMANDER 8y ago

Wow. Your time was valuable enough to be billed at nearly a grand an hour, and you didn’t think you could do significant better than $50/h working for yourself? The other commenters in this thread seem to think that a ratio of roughly 3:1 is normal for a coder. Why do you think the difference is so huge?

runako 8y ago
> As a management consultant, Management consulting is a very different industry than (most) coding for hire.

deleted 8y ago

[deleted]