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Consulting Rate Calculator - beta

If you are contemplating becoming a consultant, the below can help you figure out rates.

Note: the below are cost-based calculations for rates and you of course also must consider the value-based rates - your market value. And of course also the general market conditions, with competitors and the economy as whole.

Quickly     per year       Per Day Per Hr
1. Base Salary You Want /hr /yr  
2. With Benefits %
   
3. Billable Time % Utilization Rate    
4. Overhead    
        To cover your costs
5. Profit considerations %      
6. Billable Rate      
 
Tweak Details Below       Of Sum     Per Year
1. Base Salary info  
  1b. Time Considerations Days Hours
2. Benefits info On Base         (52 wks x 40 hrs)
  Bonuses%
   Vacation
  Social Security%
   Sick time
  401k / 403b%
   Holidays
  Disability%
 Sum Time Excluded
  Healthcare%
 Net Available Work Time
  Pension%
 Costs so far
 Total Benefits%
 
Sum Salary and Benefits=
  
  Time Off%
 
         
3. Billable Time info Days/yr Hrs/Yr
            Net Avail. Work Time
  Admin % 5-10%    
  R&D % 10-30%    
  M&S % 5-10%    
  Misc (travel etc) %      
Sum Non-Billable Time
%      
Net Billable Time % Utilization Rate    
Adjusted Costs          
4. Overhead info per yr     Billable time (per year)
Total Overhead        
           
5. Profit info %      
Recommended Billing Rate:    
            Revenue
            Expenses
        Gross Profit Margin

More Tips and Thoughts

1. Base Salary

Start with the base salary you want and enter either yearly salary or hourly salary. The calculator automatically calculates the opposite to what you enter.

Tip: In all fields for amounts, you can use 'k' or 'K' thousands. E.g. 10k = 10,000; 4.5k = 4,500.

Note: when entering a 'summary' value for (e.g.) benefits amount (for instance 30 [%]), all detailed values are striked-through to indicate that these are not used.

2. Benefits

  • Total benefits are often budgeted around 30% of base salary.
  • Default detailed percentages are from a ~$100k example at salary.com (May 2010), with some minor adjustments to have the 30% just mentioned (we like nice and round figures for budgetary purposes).
  • Note: when viewing data at salary.com, Time Off is included in Benefits. (And therefore % of Total doesn't correspond to values calculated above.)
    PM III ex

3. Billable Time

You definitely cant't have 100% billable time! At a minimum, you will have to spend at least some time on various internal work like:

  • Administration: general administration, business development and similar general activities.
  • Research and Development (R&D): this could - or should if selling your know-how - be the biggest item.
  • Marketing and Sales (M&S): you also need spending some time on getting your message out, and closing deals - getting new contracts.
  • Miscellaneous: a bit of catch-all, and the number you enter could vary widely. Think about time to travel (e.g. flying to another city) and downtime.

Combined, many examples use a total figure of 30-50% for non-billable time, i.e. 50-70% billable time, also known as the utilization rate.

4. Overhead

Below is one example found on the Internet that provide a good overview of various cost items you should consider (note that personal insurances for health etc is included in the Benefits section in our calculation above and should NOT be included in the value for Overhead in the calculation above):

 
SAMPLE PROJECTED OVERHEAD EXPENSES



Rent
Utilities
Telephone
Pager
Cellular telephone
Online computer service (Internet)
Postage
Equipment
Furntiture
Stationery
Printing / supplies
Answering service
Typing / secretarial service
Legal / Accounting
Business Licenses / Permits
Insurance:
Health
Life
Disability
Liability, etc.
Auto
Work. Comp (2%)
Advertising
Dues / Subscriptions
Reference material
Travel
Entertainment
Professional Mtg./Conv./Trade
Education
Auto (TBA)
Equipment Lease
Supplies
Maint./Cleaning
Misc.

TOTAL:
MONTHLY

500.00
150.00
300.00
11.33
40.00
30.00
96.00
150.00
150.00
50.00
50.00
100.00
100.00
160.00
25.00
400.00
100.00
85.00
50.00
120.00
66.00
200.00
60.00
50.00
100.00
200.00
200.00
100.00
120.00
125.00
50.00
75.00
100.00

4113.33
ANNUAL

6,000.00
1,800.00
3,600.00
136.00
480.00
360.00
1,152.00
1,800.00
1,800.00
600.00
600.00
1,200.00
1,200.00
1,920.00
300.00
4,800.00
1,200.00
1,020.00
600.00
1,440.00
792.00
2,400.00
720.00
600.00
1,200.00
2,400.00
2,400.00
1,200.00
1,440.00
1,500.00
600.00
900.00
1,200.00

49,360.00

From http://www.deionassociates.com/setfee.htm

5. Profit

Any company should of course aim to make a profit... Maybe not the first year but certainly over time.

About the Calculator

Beta - The work on this second generation of rate calculator was started in March 2010 and is still in development and test. It has so far been developed and tested using Firefox v3.6 (on Mac) plus limited tests using Google Chrome (also on Mac) but has not yet been verified on too many other platforms. Definitely not extensively. (This calculator is rather advanced using advanced CSS, JavaScript, and parts of content created with PHP.)

Version Date Notes
2.0b1 2010-03-19 Updated, based on a calculator by COMGT from 2003.
2.0b2 2010-11-03 Bug fix (overhead)

 

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