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I keep coming back to this. What I think a lot of the other comments are missing is: 1. This is a LATERAL move 2. You are being paid at MARKET RATES in BOTH CO

by basseq 11y ago

I keep coming back to this. What I think a lot of the other comments are missing is: 1. This is a LATERAL move 2. You are being paid at MARKET RATES in BOTH COMPANIES: the business models just differ You are NOT being underpaid and this is NOT a foundation for negotiation. Think about it this way. You take home $20/hr currently. Your costs to your current company (salary, benefits, taxes, overhead, etc.) are probably around $35/hr. They're billing you out at $45/hr and making a 20% margin. Your client sees an opportunity to pay you $30/hr directly (call it $40/hr loaded with benefits, taxes, etc.) for the EXACT SAME WORK. They are saving $5/hr. If you go back to your current company and demand a 1.5x raise... well, let's do the math. You make $30/hr. $40/hr loaded costs. So they'd have to bill you at $50/hr to make it worth their while. The client won't pay that, so the market won't bear a raise.

brudgers 11y ago
Market rate means what can be achieved in the market. Only being able to offer low wages means that the company cannot compete at the market rate. Typically a consultant will have a multiplier of at least 2x and more likely 3x. They have to cover overhead and risk and generate a profit directly from the rate. A company that makes widgets makes their profit mainly on the price and sales volume of widgets...reducing overhead helps but isn't the driving force. The consultancy may need to raise its rates or its principals may need to accept lower rates of return on their equity in order to pay market rate salaries. Or they can bill out staff with lower expertise at lower rates. Particularly if they are competing on price. But if a consultancy is competing on price, then their also probably looking to profit from the buy out clause on their employees. Letting talent go to their clients is good for business. If the OP moves on to the client, the consultant has a relationship with someone inside. This is good [usually] when it comes to getting future work.

by basseq 11y ago

brudgers 11y ago

Market rate means what can be achieved in the market. Only being able to offer low wages means that the company cannot compete at the market rate. Typically a consultant will have a multiplier of at least 2x and more likely 3x. They have to cover overhead and risk and generate a profit directly from the rate. A company that makes widgets makes their profit mainly on the price and sales volume of widgets...reducing overhead helps but isn't the driving force. The consultancy may need to raise its rates or its principals may need to accept lower rates of return on their equity in order to pay market rate salaries. Or they can bill out staff with lower expertise at lower rates. Particularly if they are competing on price. But if a consultancy is competing on price, then their also probably looking to profit from the buy out clause on their employees. Letting talent go to their clients is good for business. If the OP moves on to the client, the consultant has a relationship with someone inside. This is good [usually] when it comes to getting future work.