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I want to go back to 2019
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"post_content": "Have you used your bill rate to justify a salary increase? I know how much revenue I will generate over the next year. Should my salary be half of that? I'm currently less then 40%.",
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No. Your bill rate can vary between clients. Show the value you add on your specific contributions.
Generally I would say your comp is 20-30% of billable revenue
I ran my own shop and taking home 100% was great but it also comes without safe harbor in the event of a downturn
Not really effectively I presume. Companies build other things into your bill rate. (Buffer resources supporting you, HR/Admin team, research team, IT team, office rent, and other general expenses that back your company.) 40% is honestly a huge cut.
Bill rate has little to no correlation to your salary. Two key things to be taken into account that impact your ability to increase your salary: engagement margin and net loaded employee cost of benefits/firm expenses/overhead.
Engagement margin is the big one. While *your* specific bill rate might come with, say, a 20% net margin, you might be subsidizing other staff on the engagement and cutting into your specific margin might make the overall engagement drop below profitability metrics.
Beyond engagement margin, your loaded cost to the firm is definitely more than 40%, accounting for overhead, benefits, stuff like that. Your loaded cost to the firm is likely somewhere in the general vicinity of 70-80% of your bill rate.
You are over estimating the profit on your bill rate. You could consider looking at your fully loaded cost (good guess is about 50% on top of your salary for benefits and other costs). After that there are other costs for the company (like paying for the people who sold that work you are doing, office space and support, etc). If you are being paid at 40% of your bill rate you are doing fine for the economic contribution you are making
As others mentioned bill rate isn't a good measure. Often we throw rates into a spreadsheet and adjust until we find something that hits target margin and makes the client feel good.
Not bill rate necessarily, but bill level. I was billed as a M / SM regularly as an A / C in all SOWs. True or not, I consider that justification that I am performing at those levels.
What are our firms going to do? Say that’s not true and admit lying to clients?
Chief
I bill out at 63,000 a week and I can tell you that is 100% not reflective off my salary lol way way less that 40%
One of the benefits of PMO work 😂
It depends on your utilization and level. Consultants get a smaller cut by a little bit. SA get more, but are also expected to help all the Cs on their projects. SP even more so and expected to help all the SAs and SPs in the practice. At practice level roles you get more at risk money, but also a bigger cut.
At Slalom 40-50 is probably the range to be in OP
One thing others have left off is that at lower levels your marginal contribution is considerably less than your hourly profitability. Your hourly profitability is enhanced by the skills of your management, leadership, and firm brand/network. Without them, you typically would not be able to sell the same services to the same people for the same rates or even at all. Your marginal contribution is considerably less than your billable profitability.
I did this. I knew I was underpaid and I structured conversations with my PAXs in terms of what I was bringing forward, financially for our practice (my loaded cost compared to my salary) and in terms of internal contributions. I was billing 225-245 an hour for two years with 95+ util both years and being paid 140k total. It didn’t help. I left Slalom for a substantial raise in April. If you want to be paid your market value, you’re not going to find it at slalom unless you’re just walking in the door, and in that case you can expect 2-3% raises YOY after that.
You consider your benefits package and bonus ?
@SA1, where did you leave to if you don’t mind?
Rising Star
This comes up in the slalom bowl every couple of weeks and most people tell the poster that they aren’t going to win the argument this way. Look it up. You need to create something or sell things to really get juice and up your salary.
A2 is right, the level has much more relevance than bill rate, as rates vary pretty widely client to client