Contractor Pay Rate vs Company Bill Rate

March 17, 2016 12:23 PM

If a recruiter is telling you he's only making like $10-$15/hr above the rate he's offering you then he's probably lying. The industry standard is anywhere from 20-75% markup. This means that for a rate of $90/hr the staffing firm is billing the client anywhere from $108/hr to $150/hr.</>
From http://peopleticker.com/bill-rate

Typical markups range from as low as 20% to 50% or more

From http://www.entrepreneur.com/article/234665

In general, niche markets (e.g., IT) produce higher markups than do traditional staffing markets (e.g., clerical). Veigele notes that occasionally her firm's markup can approach 75 percent for a computer company client.

From http://www.eremedia.com/fordyce/heres-how-to-set-your-contract-staffing-rates/

Once you have an hourly pay rate for the contractor, you can use an average multiplier to calculate the hourly bill rate for the company. The location of the contract assignment can affect what multiplier you use. If you are placing someone in New York the multiplier would be higher than Michigan. Multipliers usually range between 1.5 and 1.8, but they can go much higher for healthcare professionals and hard-to-fill positions. 

Our tracking shows that the current average multiplier for technical and professional contract staffing throughout the United States is 1.60. For the past 10 years it has ranged from an average of 1.51 to 1.67. (Excluding healthcare contract placements.) 

Note: The multiplier is defined as the quotient of the company bill rate divided by the employee pay rate. A simple example of a 1.5 multiplier would be a scenario where the bill rate is $60 per hour and the pay rate is $40 per hour. The common term for multiplier is also "mark-up."