US · Margins
How do you set a bill rate for a staffing placement?
The bill rate formula: burdened pay cost, target margin, and the markup multiple that gets you there.
The short answer
Start with the pay rate, add employer burden of roughly 12 to 22 percent, then divide by one minus your target gross margin. A $25 pay rate at 18 percent burden costs $29.50; at a 25 percent target margin the bill rate is $39.33, a markup multiple of about 1.57.
Markup multiples are the shorthand the industry trades in, but they are an output of the maths, not an input. A 1.5 multiple is healthy where burden is low and disastrous where workers' compensation on a high-risk job class runs into double digits.
Price the job class, not the client. Roofing, warehouse and clinical work carry very different comp rates, and a single blended multiple across a mixed book quietly subsidises the risky placements with the safe ones.
Where a client sets the bill rate — common in MSP and vendor-managed programmes — the negotiation moves to pay rate and volume instead. Know your floor before you enter it: the pay rate at which the assignment no longer covers its own funding cost.
United States
How this differs by US state and metro
The answer above holds nationally. What changes locally is registration, insurance, wage rules and how much cash each contractor consumes — these are the states and metros founders ask us about most.
New York
New York City · Brooklyn · Long Island
New York bill rates are among the highest in the country, which is good for gross margin and bad for cash: the higher the pay rate, the more each contractor consumes while you wait for the invoice. Factoring or payroll funding is close to standard here.
New York guideTexas
Dallas–Fort Worth · Houston · Austin
Texas is a volume market: light industrial and logistics run high contractor headcount at moderate margins, which makes the working capital requirement large relative to profit. Factoring lines scale with invoices here and are the usual answer.
Texas guideFlorida
Miami · Orlando · Tampa
Florida hospitality and healthcare clients frequently pay on 45 to 60 day terms while the workers are paid weekly. Seasonal peaks mean your largest payroll weeks and your slowest collection weeks can arrive together — size the facility for the peak, not the average.
Florida guideIllinois
Chicago · Naperville · Rockford
Illinois compliance costs are front-loaded, and light industrial margins are thin, so the funding line has to cover both the payroll gap and the administrative load. Model the long-assignment pay step-up into your bill rate from day one or it will eat the margin later.
Illinois guideMetro-level wage, bill rate and startup cost detail:
Local questions
Does this change if I start in New York?
The national answer holds. What changes in New York is local: New York bill rates are among the highest in the country, which is good for gross margin and bad for cash: the higher the pay rate, the more each contractor consumes while you wait for the invoice. Factoring or payroll funding is close to standard here. Check the New York page before you register anything, and model the cash gap on New York pay rates rather than national averages.
Is the answer different in Texas than in New York?
The economics are the same shape; the local detail is not. In Texas: Texas is a volume market: light industrial and logistics run high contractor headcount at moderate margins, which makes the working capital requirement large relative to profit. Factoring lines scale with invoices here and are the usual answer. That affects your registration checklist and your working capital number, not the underlying principle.
Which US cities does this apply to?
All of them — but we publish metro-level bill rate, wage and startup cost detail for San Antonio, Miami, Orlando, Tampa and more, because pay rates and buyer mix vary far more between metros than between states.
Do I need a separate licence in every state I place in?
You register where you have employees and where you do business, not once nationally. Most states require unemployment insurance and withholding registration plus workers' compensation cover; a minority licence employment agencies, and some cities — New York City among them — licence separately from the state. Confirm each state and city before your first placement there.
Go deeper
Staffing agency funding: how US agencies fund payroll and growth
How US staffing agencies fund contractor payroll and growth: invoice factoring, payroll funding, asset-based lending, bank lines and equity — what each costs, what it requires and when each one fits.
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