Do consulting firms let their employees know how much their time is billed out at? In my post on setting consulting fee rates, Deb asked about the sensitive nature of paid wages vs client billing. She wrote:
Do consulting firms let their employees/consultants be aware of the actual amount a client is being charged? I have had a few clients "leak" it to my staff and I have felt a bit uncomfortable.
Many consulting firms do let their employees know what amount is actually charged to the client. When I worked for a software development consulting firm, the company charged Fortune 500 clients around $150 an hour. My friends on the professional services team made about $60,000 to $80,000 per year. Their wages worked out to around $32 to $42 an hour, when you allow for vacation and sick time and a 40-hour work week.
Were my consulting friends annoyed? Well, some of them were. But were they right to be annoyed? I don’t think so. They didn’t have to pay for overhead, insurance, travel, administration, finance, marketing, technical support, computers and equipment or really take on any risk. That’s why consulting fees include profit margins, overhead and all the costs of doing business.
But should you tell your staff or subcontractors what their time is being billed at? That’s really up to you. I wouldn’t make it a big secret — that suggests you may be holding back on other information. Still, I don’t think you need to advertise it to your staff or subcontractors. If they kick up a fuss, you could point out all the costs, risks and responsibilities you bear. And note your firm’s value add — your name, experience, skills and credibility obviously add to the overall package or you wouldn’t be able to bill at that rate, even for a junior staffer. If something goes wrong, it’s ultimately you who will be held responsible.
"Should you tell your staff what their time is billed at?" from Become a Consultant at ConsultantJournal.com.