Billable/Pay Ratios and Billable Percentages

[RevMen]

This probably applies more to consulting engineers to in-house engineers.

I'm trying to get a better grasp of what a typical ratio is between billable rate and pay rate, and what a typical expected billable percentage is. My understanding is that a typical billable to pay ratio is 3.0 and a typical expected billable rate is 85%. But I could be wrong. What's your experience?

I just got a good pay raise, but my billable rate went up even more. They're now at a ratio of 3.9. We don't have a specified minimum billable percentage but we probably operate in the 75% range (we're a small house and we do a lot of research papers).

 

[JoeBoone82]

I dont really get to see many of the numbers at my level, but I believe we are around the 2.85 +/- range from what I've heard, depending on the discipline and the client. i.e. Dept of Transp. projects have set multipliers which are lower than other projects. Our percentages are based on our position, most pure designers are around 88%. The managers, administration, etc are of course lower.

 

[Santiagj]

I usually see multiplyers of 2.7-2.85 for the consultants I use. I would think that 3.9 is extremely high. As a client I would throw a s**t fit is I saw a multiple like that. But on the other hand you can always estimate the hours higher to make up for it.

 

[Dexman PE]

Our multipliers depend on the client, project, and the position of the people on the project (each project has a project specific rate sheet). Sometimes I'm the PM, other times I'm not. Obviously my salary stays the same, but the billable rate changes. Our billable rates are determined by the average salary of everyone at that level, so if I'm paid 3-4% higher than someone else at the same level the individual multiplier will vary.

 

[civil12]

"I would say in a given day i get about 15 min. of good hard work done"

 

[Hromis1]

Our multipliers are around 2.2 for the worst rate schedule we have. They go down from there if you start send big contracts our way. However, the average guy we employ has more than 20 years experience, some 40 years. It is the best group of people I have ever worked with. We keep our fixed overhead to a minimum and most the money goes straight to salary. On an hourly basis, I'm paid as well or better than many other engineers I know. Plus, in a tough economy, it makes a heck of a sales point. Numbers wise, we are a mid-sized firm, but with a select niche, big-name client base.

Just yesterday I had a mid level engineer complain to me that he was being forced to use another "Big" engineering firm who's rates are closer to 4. To make it worse, they sent him a bunch of job-shoppers with limited experience. This was a "board-room" decision to hire this 2nd firm. Not the plant level guys. Already the client is coming back to us.

It appears that some of the big mark-ups impressed people at first with the fancy offices they produce. But now that times are tough, we are winning back our client base.

FYI, I usually see mark-ups of 10% on outside consultants, we keep ours down to 5%, or nothing if our client pays them directly.