How Do I Determine a Mark-Up for a Contract Placement?

A common question we often hear from recruiters is "How do I determine a markup for my contract placement?" Mark-ups are also referred to as multipliers.  For those of you who are not familiar with this term, a multiplier is the result of dividing the bill rate by the sum of the pay rate and per diem. Per Diem is the daily rate that is given to help contractors working away from home cover living expenses.

Once you know what the contractor pay rate will be, you can multiply that pay rate by a multiplier to calculate the bill rate.  For example, if you had a $49.50 bill rate and a $30 pay rate, the multiplier would be 1.65.

Top Echelon Contracting tracks the multipliers for each placement made through our contract staffing back-office to determine the average multiplier. Our records show that the average multiplier for February was 1.64. 

We always recommend that recruiters use the average multiplier as a starting point when trying to determine the client bill rate. However, keep in mind that there is no standard multiplier for every contract placement.  Multipliers generally fluctuate between 1.50 and 1.80 for technical and professional placements. Healthcare placements tend to run higher. Depending on the type of candidate needed and the location of the job, you may need to adjust your rate.  For instance, if the job order requires a hard-to-find skill, the multiplier is normally higher.

Your recruiter income is directly affected by the multiplier and the bill rate that you negotiate as a result.  To ensure that you are satisfied with the profit you will earn, please call our office for a quote.

Debbie Fledderjohann is the President of Top Echelon Contracting, Inc.

Views: 771

Comment by Jennifer Olsen on March 13, 2012 at 9:09pm

Also consider the cost of unemployment and medical benefits if provided to temporary employees before determining markup.  The markups reflected in the article is what we are seeing in Seattle as well.  Thank you for sharing this information!

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