How to Calculate Bill Rate Markup

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Staffing & Agency Bill Rate Calculator
$
%
Standard US burden is typically 15-20%.
%
The premium added on top of the pay rate.
Final Client Bill Rate $0.00
Total Employee Cost (Pay + Burden) $0.00
Gross Profit (Hourly) $0.00
Gross Margin % 0.00%
Multiplier 0.00x
function calculateBillRate() { // Get input values using var var payRateInput = document.getElementById('payRate'); var burdenRateInput = document.getElementById('burdenRate'); var markupInput = document.getElementById('markupPercentage'); var payRate = parseFloat(payRateInput.value); var burdenPct = parseFloat(burdenRateInput.value); var markupPct = parseFloat(markupInput.value); // Validation if (isNaN(payRate) || payRate <= 0) { alert("Please enter a valid hourly pay rate."); return; } if (isNaN(burdenPct) || burdenPct < 0) { burdenPct = 0; } if (isNaN(markupPct) || markupPct 0) { grossMargin = (profit / billRate) * 100; } // 6. Calculate Multiplier (Bill Rate / Pay Rate) var multiplier = 0; if (payRate > 0) { multiplier = billRate / payRate; } // Display Results document.getElementById('finalBillRate').innerHTML = '$' + billRate.toFixed(2) + '/hr'; document.getElementById('totalCost').innerText = '$' + totalCost.toFixed(2); document.getElementById('hourlyProfit').innerText = '$' + profit.toFixed(2); document.getElementById('grossMargin').innerText = grossMargin.toFixed(2) + '%'; document.getElementById('multiplier').innerText = multiplier.toFixed(2) + 'x'; document.getElementById('results').style.display = 'block'; }

How to Calculate Bill Rate Markup

In the staffing and consulting industry, calculating the correct bill rate is essential for profitability. The "markup" represents the percentage added to a candidate's pay rate to determine what the client is charged. However, a common pitfall is confusing Markup with Gross Margin.

This calculator helps agencies, recruiters, and consultants determine the final bill rate, account for employment burdens (taxes, insurance, benefits), and visualize the resulting profit margin.

The Core Formulas

To calculate your bill rate and understand your profitability, you must distinguish between the markup percentage and the actual costs associated with employing a candidate.

1. Calculating Bill Rate from Markup

The standard industry formula for calculating the bill rate based on a desired markup percentage is:

Bill Rate = Pay Rate × (1 + Markup %)

Example: If the candidate is paid $50/hr and your standard markup is 50% (or 0.50):
$50 × 1.50 = $75.00 Bill Rate.

2. Calculating Total Cost (Burden)

Your profit is not simply Bill Rate minus Pay Rate. You must account for the "Burden" or "Load." This includes FICA taxes, unemployment insurance, workers' comp, and internal benefits.

Total Cost = Pay Rate + (Pay Rate × Burden %)

Example: With a 15% burden on a $50 pay rate, your actual cost is $57.50 ($50 + $7.50).

3. Calculating Gross Margin

While Markup is calculated on the Pay Rate, Margin is calculated on the Bill Rate. This is the percentage of the bill rate that is actual profit.

Gross Profit = Bill Rate – Total Cost
Gross Margin % = (Gross Profit / Bill Rate) × 100

Markup vs. Margin: Why it Matters

Many new agency owners make the mistake of thinking a 50% markup results in a 50% margin. This is incorrect.

  • Markup is the multiplier applied to the cost (Pay Rate).
  • Margin is the percentage of revenue (Bill Rate) that you keep as profit.

As shown in the calculator above, a 45% markup on a $50 pay rate (with 15% burden) results in a Gross Margin of roughly 20%, not 45%. Understanding this distinction is critical for maintaining healthy cash flow and operational stability.

Typical Markup Rates in Staffing

Markup rates vary significantly by industry and specialization:

  • General Labor / Light Industrial: 35% – 50%
  • Administrative / Clerical: 40% – 60%
  • IT / Professional Services: 50% – 75%+
  • Healthcare / Locum Tenens: 60% – 100%+

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