A consulting salary needs to work with the hourly billing rates you charge and the salaries you can afford to pay yourself and your employees as your business grows. In other words, the consulting salary you create has to be affordable and take into consideration hourly billing rates.
Your consulting salary also has to appeal to sales and tech staff as part of your expanding business. You will not be able to stay competitive and get the best staff if you can’t set appropriate rates, and your business growth will be stalled.
Consulting Salary: How Do You Figure Out $75 Per Hour?
$75 per hour sounds great, and most people will think of it as a salary approaching $150,000 annually. However, these assumptions are based on an idea of little overhead and low taxes.
Determining a consulting salary is a challenge, and when figuring it out, you have to think about only being able to bill out 75% of any given week. This means right off the bat you go from a $150,000 annual salary to about a $112,000 salary. While this still sounds great, it is not an accurate way to determine a consulting salary.
The Triple Billing Rule
Your total revenue is actually comprised of three parts. One-third of it goes to sales and marketing, another third goes to taxes, insurance, fringe benefits and other overhead piece. The other third goes towards the consulting salary. With this triple billing idea in mind, taking the $75 per hour deal and figuring out consulting salary, you are suddenly left with $49,500, without the other business expenses associated.
Look at a consulting salary realistically, and you will find a very complex structure of setting billing rates. Your rates has to be high enough so you can get enough money to live and so you can attract great candidates for positions within your computer consulting business. Still, you want your rates to be low enough to attract clients.
What About the Consulting Salary?
Consulting salaries will come out of the final third of overall consulting revenue, and the first order of business is always marketing, sales, taxes, insurance and administration. Make sure you can pay yourself a consulting salary that is equal to what you might make working for someone else. Attract the talent you need to get your computer consulting business off the ground!
Added By: Computer Consulting Kit