compensation vs. hourly billing (!)

Anyone out there seen what their companies bill for their time? I’ve randomly seen some invoices and shocked at the difference. I initially got hired through a staffing agency that was charging the employer TRIPLE what they were paying me as a freelancer. Once I was hired on as a FT employee and offered a salary (I make slightly less than I did as a freelancer) I learned that my employer bills its clients nearly 5x what it pays me! Like anyone I’d love to be getting paid more, but this makes me think I should be getting paid a lot more. Does anyone know if this is standard practice?

A company has to roughly charge out at 3 times what they pay you to be making money off your employment. This is keeping in mind that they pay you when your not completing billable work. With this in mind, it does seem that 5 times your income does seem a little high.

It’s business, obviously your company is going to try and charge as much as it can for the services it employs you to do. I wouldn’t feel slighted for it, it’s keeping you in employment but if you feel you’re not being paid enough for your work then ask for a raise or find a new job.

Office space, equipment and health benefits are considerable… bills need to be paid even if the staff isn’t being productive at certain times of the year. The salaries of non-producing staff need to be factored in too… the secretary’s time isn’t billed to a client and neither is the accountant etc.

That’s why is can be easy to start a business when you have low overheads and you do things yourself so you can undercut the competition but as you get bigger, incur the costs of larger buildings and support staff you need to charge more.