{ "media_type": "text", "post_content": "Wait, I’m confused. Someone said SCs are typically billed to clients at 250/hour. I’m on a multi year project full time. Just 1 years worth of my time would be 480k for the client, no? How is that feasible? That’s so much! We have a team of 4 SMs, 3 SCs, 1 C, 2 As, and 25 subcontractor employees - that’s millions a year just to pay us. (48 weeks X 40 hours X 250)", "post_id": "6288af1ba09f80002b2c4e1d", "reply_count": 25, "vote_count": 3, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting", "feed_type": "crowd" }
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Wait, I’m confused. Someone said SCs are typically billed to clients at 250/hour. I’m on a multi year project full time. Just 1 years worth of my time would be 480k for the client, no? How is that feasible? That’s so much! We have a team of 4 SMs, 3 SCs, 1 C, 2 As, and 25 subcontractor employees - that’s millions a year just to pay us. (48 weeks X 40 hours X 250)

likefunny
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Welcome to the absurdity that is consulting. In reality, different types of contracts exist that could discount the total cost for the client, shift risk to the firm, cap total costs, etc., but yes consultants are expensive.

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"70% off - business relationship investment" 🤡

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Wait till you see the MBB Bill 😂

likefunny

Also partners’ rates are usually underestimates to hide how much they make

likehelpful

OP it isn't that simple.

First, US consultants have a list rate that is often discounted pretty significantly; when you are on a US/USI project, your rate will get hit hard while USI always bills out at full list rate (just a quirk of Deloitte's contracting rules). Your list rate is much, much higher than $250/hr, but $250 is honestly pretty cheap for SC level.

Second, most of us are not typically billing 2,080 hours to clients every year. Your rate recognizes that you may have a series of 8-12 week projects, each separated by a two week bench period. You also have vacation and firm holidays (23 PTO days plus 15 firm holidays, so 38 days of getting paid not to work), and you have other things like training where you aren't billing your clients.

Third, your salary is not the whole story when it comes to your cost. Your personal cost to the firm is higher: you have benefits that cost a lot, and the firm pays taxes on your salary. There are also overhead requirements, such as your technology assets and work spaces in office. If you make $100k in cash, the firm might be investing $150k or more in you each year.

Fourth, the firm has non client billing personnel: HR, finance, internal consulting, independence, training, sales, etc. Also, higher level consultants have lower utilization targets, meaning that they are individually less profitable based on billings than lower level consultants. These people need to get paid too, and their pay comes from what you bill.

I'm on a long term project right now. Even if I end up billing about 2,000 hours this year, the firm won't be making much money off of me; my rate just covers my cost to the firm. The project itself has a nice margin, though, since we're very USI heavy.

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Great explanation EM1! OP, I'm surprised you don't know the award value of your project - unless you've seen the invoices, I don't think you can say that 4 of you are bringing in 2M annually.

We often lose money on higher levels. And not knowing anything about your engagement - is it T&M? FFP with a rate card? Are their discounts? Are people actually billed by level? It's really hard to make any judgements. I'm assuming you're commercial bc $250/hr would be high for GPS for SC. Remember, we also have a ton of overhead as a firm (nice offices, DU, all of our internal support people, generous benefits etc).

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My team bills SCs out over $300/hr. Clients have to pay, they can’t find enough qualified employees in this job market.

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You have as many SMS as C And SC combined?

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Yes, and this structure functions as dumb as it sounds.

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$250 is low. I’d have expected that for an analyst

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I’m at $154 as an SC - just dependent on project, commercial vs GOS, etc

The work needs to get done, and it's cheaper to draft up a 5 or 10 million contract with a consulting firm then try to hire 10 FTEs, pay their benefits, and be forced to keep them around for years. Bug consulting firms can cut at any time and are held to a high level of quality

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I have had visibilty into rates charged and corresponding level's pay grades for 2 of the big 4 in various geographies. This sounds accurate. If you make 100k a yr for example, then you would be generating about 400k of revenue for the firm. Don't forget there are overheads and taxes to be paid so it's not like the partners are pocketing the entire difference but ofcourse they do pocket a big chunk of what's left, and that's fine because that's the business model and that's why people aim for a partnership.
Also, sometimes a lot of hours are also given away for free to strategic clients to generate goodwill.
Plus usually SMs and sometimes Ms split their time across projects.

It wouldn't be as high as 4 times unless it's a very lucrative engagement bit you're quite spot on.

Our charge rates also pay for offices, downtime, training, CBS staff, the firms contribution towards insurance etc etc . We don't sell products we sell service.

That is 1 years worth of Deloitte’s SCs time. Don’t take it personally

Lol definitely not taking it personally, I get paid peanuts

I suggest you get your project’s manager or SM to spend 15 mins with you on the pricing tool. It’s probably helpful for you to understand a bit more on how the commercials on your project really works. There are discounts/margins/different resource pool to get resources to get to the desired margin/etc…. My advice the earlier you learn about project financials in your career the better.

If you look at the SOW you'll see the labor categories and rates. It's possible half those SMs aren't billing at all and the others are billing just a few hours per week (for meetings).

Sounds low. The analysts on my project are being billed at $350/hr.

My SCs are offshore so they’re all under $50/hr

Department hiring you is paying a premium for the right to blame you if things don’t go to plan.

Also consider blended rates, when you look thru that lens and the quality of work we deliver when compared to their employees, the client is getting highly productive force for a very good rate.

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