Bravo Billing Analysis: Effective Hourly Rate								6-Apr-06
For salary employees, the hourly wage reflects the actual earning rate. For professionals working on time and materials basis, there's an enormous gap between the billing rates and actual earning rates. By the time such things as: clock time waiver, dilution factor* and overhead ** are factored in, the final "effective rate" is only a tiny fraction of the billing rate.
Avg billing rate		40	50	55	60	70	80	90	100
clock waiver 25%	0.75	$    30.00	$    37.50	$    41.25	$    45.00	$    52.50	$    60.00	$    67.50	$    75.00
billable ratio 4:1	0.25	$      7.50	$      9.38	$    10.31	$    11.25	$    13.13	$    15.00	$    16.88	$    18.75
overhead 20%	0.80	$      6.00	$      7.50	$      8.25	$      9.00	$    10.50	$    12.00	$    13.50	$    15.00
Avg billing rate		40	50	55	60	70	80	90	100
clock waiver 15%	0.85	$    34.00	$    42.50	$    46.75	$    51.00	$    59.50	$    68.00	$    76.50	$    85.00
billable ratio 3.5:1	0.29	$      9.71	$    12.14	$    13.36	$    14.57	$    17.00	$    19.43	$    21.86	$    24.29
overhead 20%	0.80	$      7.77	$      9.71	$    10.69	$    11.66	$    13.60	$    15.54	$    17.49	$    19.43
Avg billing rate		40	50	55	60	70	80	90	100
clock waiver 10%	0.90	$    36.00	$    45.00	$    49.50	$    54.00	$    63.00	$    72.00	$    81.00	$    90.00
billable ratio 3:1	0.33	$    12.00	$    15.00	$    16.50	$    18.00	$    21.00	$    24.00	$    27.00	$    30.00
overhead 20%	0.80	$      9.60	$    12.00	$    13.20	$    14.40	$    16.80	$    19.20	$    21.60	$    24.00
Avg billing rate		40	50	55	60	70	80	90	100
clock waiver 5%	0.95	$    38.00	$    47.50	$    52.25	$    57.00	$    66.50	$    76.00	$    85.50	$    95.00
billable ratio 2.5:1	0.40	$    15.20	$    19.00	$    20.90	$    22.80	$    26.60	$    30.40	$    34.20	$    38.00
overhead 20%	0.80	$    12.16	$    15.20	$    16.72	$    18.24	$    21.28	$    24.32	$    27.36	$    30.40
Avg billing rate		40	50	55	60	70	80	90	100
clock waiver 0%	1.00	$    40.00	$    50.00	$    55.00	$    60.00	$    70.00	$    80.00	$    90.00	$  100.00
billable ratio 2:1	0.50	$    20.00	$    25.00	$    27.50	$    30.00	$    35.00	$    40.00	$    45.00	$    50.00
overhead 20%	0.80	$    16.00	$    20.00	$    22.00	$    24.00	$    28.00	$    32.00	$    36.00	$    40.00
Client Tier	Hourly	40-hour work week		60-hour work week		80-hour work week
	Rate	Weekly	Annual	Weekly	Annual	Weekly	Annual
Legacy/Pro Bono Clients	7.50	$       300	$  15,000	$       450	$  22,500	$       600	$  30,000
Entry-Level Clients	10.00	$       400	$  20,000	$       600	$  30,000	$       800	$  40,000
Mainstream Clients	15.00	$       600	$  30,000	$       900	$  45,000	$    1,200	$  60,000
Top Tier Clients	20.00	$       800	$  40,000	$    1,200	$  60,000	$    1,600	$  80,000
Near-term Goal	25.00	$    1,000	$  50,000	$    1,500	$  75,000	$    2,000	$ 100,000
Medium-term Goal	32.00	$    1,280	$  64,000	$    1,920	$  96,000	$    2,560	$ 128,000
*Dilution Factor: Also known as billable ratio. 3:1 means for every 3 hours of actual work (including behind-the-scene preparation, research, administrative tasks, etc.), there's 1 hour of billing. In the IT industry, that ranges from 2.5:1 to 4.5:1.
**Overhead: Office rent, repair and upkeeping, furniture. Staffing and contracted help. Office supplies. Energy & utilities costs. Equipment and apparatus. Software licenses. Subscriptions and guild membership. Support contract fees to vendors. Training,  education & certification/authorization. Transportation, communications, freight and other Logistical expenses.