this post was submitted on 07 Nov 2024
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I don't think that's the paragraph you're looking for to make your point.
If you’re charging your plumbers out at $110 per hour (minimum hours, plus travel, plus parts) and only paying them $30..
That's some margin.
Yeah, I'm a software developer, and in the past when my time was billable it was billed somewhere between 3-4x what my total compensation was. I get that they need to make money off me but that was a quick disillusionment when I learned what the variance was
Depending on overheads, your time has to be worth between 1.8 - 2.2x your compensation. For the company to make money and stay in business, it has to charge above this amount.
But if your company is charging you out at 4x your compensation, they are making a massive amount off your time. A reasonable amount would be aroung 2.1 - 2.5x your compensation.
As an anecdote, my little brother finished his architecture degree after being a builder for years. He had both the practical skill from building and the eye of an artist. He got a job at a very prestigious firm. It wasn't long before they saw how good he was, even though he was a grad his charge out rate was $180/hr. I asked how much of his time was billable, it was not as you would expect for a grad, his time was 100% billable work, he was being paid $25/hr. I was shocked, after trying to negotiate with the firm for a year he got a pay rise to $30/hr. It was only a month later he quit and started his own business, he charges much less than previously for the same work and he makes significantly more.