Turn a pay rate into the rate to charge, or check what markup and margin a client’s rate actually leaves you after burden. No signup, no email.
Bill rate to charge
$37.50/hr
A 50% markup on a $25.00 pay rate. After burden you keep $9.50 an hour, a 25.3% gross margin.
Gross spread
$12.50
bill rate minus pay rate
Burden
$3.00
12% of pay rate
Gross profit
$9.50
25.3% gross margin
To keep a 20% gross margin, charge
$35.00/hr
A 40.0% markup on this pay rate
Weekly gross profit per worker
$380
At 40 hours, before your own overheads
Markup is not margin: the same pay rate at different markups
| Markup | Bill rate | Margin before burden | Margin after burden |
|---|---|---|---|
| 20% | $30.00 | 16.7% | 6.7% |
| 30% | $32.50 | 23.1% | 13.8% |
| 40% | $35.00 | 28.6% | 20.0% |
| 50% | $37.50 | 33.3% | 25.3% |
| 60% | $40.00 | 37.5% | 30.0% |
| 75% | $43.75 | 42.9% | 36.0% |
| 100% | $50.00 | 50.0% | 44.0% |
A 50% markup is a 33% margin before burden, and less after it. Quoting one when you mean the other is the most common pricing mistake in staffing.
Figures are what your inputs imply, not a market benchmark. Rates, markups and burden vary by state, job code and vertical: use your own.
The formulas
The last one is the formula to price with. Start from the margin your business needs to cover recruiters, software, insurance and the cost of carrying payroll, and the markup follows. Starting from a markup that “sounds right” is how agencies end up busy and broke.
Before you quote
Burden you guessed. Workers’ comp rates differ enormously between an office role and a warehouse role. Price each job code with its own burden.
Overtime. Overtime pay usually costs more than the base rate. If the contract does not bill overtime at a multiplier too, every overtime hour shrinks your margin.
Payment terms. A good markup on net-60 terms can still leave you short of cash. Check the cash flow calculator before agreeing long terms, and write rates, overtime and conversion fees into your staff augmentation agreement.
More on how the money works: how staffing agencies make money.
Common questions
Multiply the pay rate by one plus the markup. A $25 pay rate with a 50% markup is $25 × 1.5 = $37.50 an hour. To start from the margin you want instead, divide your full hourly cost (pay plus burden) by one minus the target margin: a $28 cost at a 20% margin is $28 ÷ 0.8 = $35.
Markup is the spread as a percentage of the pay rate; margin is the spread as a percentage of the bill rate. On a $25 pay rate billed at $37.50, the $12.50 spread is a 50% markup but a 33% margin. Margin is always the smaller number, and gross margin after burden is smaller again. Agree with your team and your clients which one you are quoting.
First the employer burden on the worker: payroll taxes, unemployment insurance, workers’ compensation and any benefits you provide. Then your own costs, such as recruiters, software, insurance, and the cost of funding payroll until the client pays, and finally your profit. That is why a markup that looks generous can leave a thin margin.
It depends on the vertical, the role, the state (because burden varies so much), the volume and the client. We do not publish a single figure because an average would mislead more than it helps. Put your own pay rate and burden in the calculator and set the target margin your business needs; it shows the markup that requires.
The cost of employing a worker on top of their pay: the employer share of payroll taxes, state and federal unemployment insurance, workers’ compensation premiums, and any benefits. It varies by state and by job classification, which is why it is an input here rather than a fixed number. Your payroll provider or insurer can give you your actual rate.
Not straight away. On contract work you pay the worker weekly and the client pays on its terms, so you fund payroll in between whatever your markup. The cash flow calculator shows how much payroll your terms make you carry and how that grows as you add contractors.
StaffingLeads watches hiring, funding, past-client and network signals, finds the decision-maker behind each one, and runs the outreach for you.
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