Bill Rate Calculator
Calculate the bill rate — the hourly rate a staffing agency or contractor charges a client — from the pay rate and a markup. The bill rate covers the worker's pay plus the firm's overhead and profit. Enter the pay rate and the markup percentage to get the bill rate, the markup amount, and the implied gross margin.
Formula
Bill Rate = Pay Rate × (1 + Markup%); Margin = (Bill Rate − Pay Rate) ÷ Bill Rate × 100
- Bill rate = pay rate × (1 + markup ÷ 100). A 50% markup on a $40 pay rate gives a $60 bill rate.
- The markup amount is the difference between the bill rate and the pay rate — it covers overhead, taxes, benefits, and profit.
- Gross margin = markup amount ÷ bill rate × 100, which is always lower than the markup percentage.
- Markup is calculated on the pay rate (cost); margin is calculated on the bill rate (price) — don't confuse the two.
- Typical staffing markups range widely (often ~40–75%) depending on benefits, overhead, and the role.
$40/hr pay rate with a 50% markup
Inputs
- Pay Rate (per hour): 40
- Markup (%): 50
Bill rate = 40 × 1.5 = $60/hr. The markup is $20/hr, which is a gross margin of 20 ÷ 60 ≈ 33.3%.
Frequently asked questions
What is a bill rate?
It's the hourly rate a staffing firm or contractor charges a client. It includes the worker's pay plus a markup for overhead, taxes, benefits, and profit.
How is bill rate calculated from pay rate?
Multiply the pay rate by one plus the markup percentage. A $40 pay rate with a 50% markup gives a $60 bill rate.
What's the difference between markup and margin?
Markup is the added amount as a percentage of the pay rate (cost). Margin is the profit portion as a percentage of the bill rate (price), and is always the smaller number.
What markup should I use?
It depends on your costs — benefits, payroll taxes, insurance, overhead, and target profit. Staffing markups commonly fall in the 40–75% range.