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Ratio between your external rate and your salary

 
#1 Ratio between your external rate and your salary
17/04/2008 18:53

Nonsense

My external billing rate has increased 10% this year which kind of got me thinking of the percentage of hourly rate I get as basic salary - and whether I'm underpaid / overpaid, or getting about the going rate.

My external billing rate is £230 / hr. Based on utilisation of 218 days last year that translates to £376K in revenue.

The hourly rate breaks down as:

External rate : £230 / hour

Gross basic salary: £45 / hour

Percentage: 19%

(based on 95% utilisation & 7.5 hour days)

I'm fairly cynical, so can't help but feel that even allowing for VAT and a few training days (I billed 218 days last year), that the consultancy I'm working for spends a lot more on internal admin and partner bonuses than they pay me - and I'm the one who works away from home all week every week.

How does this compare to everyone else?

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#2 RE: Ratio between your external rate and your salary
17/04/2008 21:16

Expat to Nonsense (#1)

That's about the same as mine in my old job (18% at 70% utilisation). In my new job, at a higher salary and higher charge-out rate (same utilisation), it's in theory down to 10%.

However, in both cases the figure is extremely misleading because in practice we charge project fees that are only partially based on an hourly rate. In fact I have no doubt that in my old job I was much more poorly paid in relation to the income I generated for the company.

Also bear in mind that your cost to your employer is substantially higher than your basic salary, once you factor in your employer's NI, tax and pension contributions, benefits, bonus, training costs etc. As a rough rule of thumb I would say that your cost to your employer is about 150% of your basic gross salary

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#3 RE: Ratio between your external rate and your salary
17/04/2008 22:00

Get with it to Expat (#2)

Unless you sold the work, you're not generating income for your firm. You're a grunt.

Anyone can look good on a timesheet. Who cares if you billed 218 days last year? Who enters a job with that ambition? What value did you add to your customers or your firm? Really?

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