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To provide some background, I am a software process/technical consultant. I have been working for my current company for a little less than a year and have a review coming up, where I am eligible for a raise.

Currently, my salary is equivalent to $53/hour

My bill rate however, is $238/hour

Personally, this sounds extravagantly high for a bill rate compared to my salary. I've read that 1/3 is a pretty standard salary:bill rate. With these numbers in mind, how much of a raise should I reasonably ask for?

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  • So basically you'd be asking for a $7 per hour raise, or roughly 13% going on the 1/3 of your bill rate.?
    – Brian
    Apr 15, 2015 at 18:15
  • 1/3 of my bill rate would be 80 an hour, which would actually be a raise of about 27/hr, which is closer to a 50% raise... probably a bit high, regardless of how good of an employee I am.
    – user2797191
    Apr 15, 2015 at 20:57
  • I would be comfortable leaving and could charge at least 100 freelance.
    – user2797191
    Apr 15, 2015 at 20:58
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    What on earth does your biling rate have to do with your salary? Do you know the other things built int it? Things like benefits, office space, administrative staff, time for developing sales proposals, etc? If you don;t know the formula, you don't know if the billing rate is fair or not and frankly it isn't any of your business. This is alosing argument for a pay raise. Yes you coudl earn more as freelance, but you have more unbilled hours while you search for more work and you have to pay for your own benefits, so that number is irrelevant as well.
    – HLGEM
    Apr 15, 2015 at 21:44
  • The 1/3 rule is more for calculating freelance rates (if you're salaried at X then you need to freelance at 3X to cover loss of salary benefits like paid leave) - not for corporate/agency billing rates. As HLGEM points out - there's a lot of overhead and other things that your company has to pay out of your bill to the client. When I worked billable hours, my ratio was closer to 1/8 rather than the 1/5 you're getting, so you're not doing too bad.
    – HorusKol
    Apr 16, 2015 at 0:26

1 Answer 1

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A pay increase at an annual review time will occur typically for one of two reasons:

  1. Resolving issues with under-payment, for instance, you might have come on as a junior and as a consequence of capped pay rises due to HR policies may not be earning as much as your peers within the company. This can be seen as a matter of fairness and depending on the company can work, however, this is typically a difficult reason to get a payrise for

  2. Recognition of performance, if you have exceeded expectations and delivered significant value then recognition of your efforts should be either be part of the existing framework of remuneration increases or be something that could be arranged. This is often easier to get put through if you've delivered value to the right people

Resolving under-payment, as I said is typically tough, and will require evidence of how your being underpaid in relation to people performing to the same standard within your company. Market conventions and rates are unlikely to be of value here unless you are prepared to leave.

Recognition of performance is an easier to achieve payrise, however, it typically requires documented evidence of success above and beyond what might be expected of someone at your level. If you have clients you've billed who have been bowled over by your quality, now is the time to collect feedback from them. Repeat business where you've been specifically requested might be a useful proxy.

A recognition of performance pay rise request should be linked to objective evidence - if you have nothing to show that you're awesome then recognition of awesomeness can't happen.

Once you've ascertained which route to take then utilising the answers on How should I approach my boss if I'm feeling underpaid should help you a lot

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