What this calculator does
The bill rate is the hourly amount a staffing agency, consultancy, or contractor charges a client for a worker's time. This tool builds it up from the worker's pay rate in two standard steps: it adds the employer's labor burden to reach a fully-burdened cost rate, then grosses that cost up by your target gross margin to reach the bill rate. It also reports the hourly spread (gross profit) and the markup multiple so you can see the whole structure at once.
The formulas
Two well-established equations do all the work:
- Burdened cost rate = Pay rate × (1 + Labor burden %). The burden covers employer payroll taxes, workers comp insurance, benefits, and paid time off on top of the wage.
- Bill rate = Cost rate ÷ (1 − Gross margin %). Because gross margin is measured against the bill rate, you divide by one minus the margin rather than multiplying.
From those, the gross profit per hour is Bill rate − Cost rate, and the markup multiple is Bill rate ÷ Pay rate. Worked example: a $25 pay rate with 25% burden gives a $31.25 cost rate; at a 30% target margin the bill rate is 31.25 ÷ 0.70 = $44.64, a $13.39 spread over cost and a 1.79× markup on pay.
Markup versus margin
These two percentages are easy to confuse. Markup is measured against cost: (Bill − Cost) ÷ Cost. Margin is measured against the bill rate: (Bill − Cost) ÷ Bill. The same dollar spread always produces a larger markup number than margin number, so a 30% margin is roughly a 43% markup. Confirm which basis a client or vendor means before agreeing to a number.
Getting accurate results
- Enter the labor burden and gross margin as percentages (25 for 25%), not decimals.
- Use a burden that reflects the real employer cost for the role. In the US, 20% to 35% of pay is common once payroll taxes, insurance, and benefits are included.
- The bill rate is an estimate for planning and quoting; for a binding contract, confirm burden and margin figures with your finance or accounting team.