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Bill rate, markup and the margin left
Enter a pay rate and your real burden. Get the bill rate, the markup, the gross margin and what the book is worth per week.
The short answer
To calculate a staffing bill rate, add employer burden — payroll taxes, workers' compensation and benefits — to the contractor's pay rate to get true hourly cost, then divide that cost by one minus your target gross margin. Markup is measured against pay; margin is measured against the bill rate.
Bill rate, markup and margin
What should you charge for this contractor?
Solve for
Markup and margin are not the same number. A 30% markup on a $25 pay rate is a bill rate of $32.50 and a gross margin of about 23% before burden — which is why agencies quoting on markup routinely earn less than they think.
Next step
Margins like these are what investors underwrite.
See who we would pair you with for your stage, sector and market — then apply with the numbers you just modelled.
Questions founders ask
How do you calculate a staffing agency bill rate?
Start with the contractor pay rate, add employer burden — FICA, FUTA and SUTA, workers' compensation and any benefits or PEO cost — to get your true hourly cost. Then divide that cost by one minus your target gross margin. Cost of $28.50 at a 25% target margin gives a bill rate of $38.
What is the difference between markup and gross margin?
Markup is expressed against the pay rate; margin is expressed against the bill rate. A 30% markup on a $25 pay rate is a $32.50 bill rate, which is a 23% gross margin before burden and lower after it. Quoting on markup while budgeting on margin is a common and expensive error.
What burden rate should a staffing agency use?
Burden is employer payroll taxes, workers' compensation premium, unemployment insurance, any benefits and any PEO or employer-of-record fee. It varies by state, vertical and claims history, and is commonly in the low double digits as a percentage of pay — but use your own carrier and payroll numbers, not a rule of thumb.
How much do staffing agencies charge employers?
For temporary and contract placement, agencies charge a bill rate that covers the worker's pay, employer burden and a gross margin. For permanent placement the standard model is a percentage of first-year salary. The right number for you depends on your burden and the value of the role, not on an industry average.
Stay close to the money
The recruitment funding briefing
One email a month: funding terms we are seeing, margin benchmarks, and what buyers are paying for agencies. Written for founders, not for a mailing list.
Margin is a decision, not a market rate
The agencies that hold margin are the ones with a niche worth paying for. We match founders with operators who have already built one.