How Much Profit From Employees? 2

[waytsh]

I am looking to hire a couple employees, an engineer and a detailer. I am in the process of determining how much I can afford to pay them and the amount I should be billing their time out at. As part of the process I am trying to determine what amount of profit I should be looking to make off of each of them. Does anyone have a recommendation? I don't want to get greedy but on the other hand I don't want to manage them for free either. I'm trying to find a reasonable balance.

 

[abusementpark]

DonPhillips, that clears its up. I wasn't considering holidays and vacation.

 

[TrafficDesigner]

Actually, we have it the other way around. A lot of our EIT's are in the low to mid 90 range and our cad people (which are very few because our EIT's do most of it) are in the 75% to 80% range. During their downtime or in between projects, they are researching or learning the latest in the software, standards etc... and just general how to be more efficient.

When you add up all of the ranges for all of the employees and divide by the number of employees, (admins too) you get an average for your business.

But to answer the question, you take the max. hours a person can bill in a year, minus vacations, sick days, holidays and overhead admin. type tasks and that gives you a rough idea of how billable that person can be for the year.

The last three firms I have worked for call it a utilization rate. I have seen several different ways to calculate it but the above is the simplified version.

 

[DonPhillips]

I agree that drafters (having been one before) spend a lot of time keeping up with their software. Some additional non-billable time for professionals would be marketing time. The last firm I worked for I was spending like 10% of my time selling the firm. This included attending trade shows, lunches, dropping by new offices to introduce myself (3 hours of driving for a 5 minute meeting).




Don Phillips

http://worthingtonengineering.com