Questions About the Billable Hours Model
Hi All,
First time long time
Thanks for taking the time. My post is actually several questions regarding the billable hours aspect of consulting.
1) How do billable hours translate into bonus, For example, if I bill 2,000 hours and my firm is charging the client $400/hr for my work, how much of that do I see as a bonus? 1/10th? 1/4th? Does this differ or increase as you move up the chain? Like analysts get a small portion but maybe partners get half?
2) How many hours are you expected to bill, or is it by dollar amount? I hear a good rule of thumb is bill 4-5x your salary (i.e. if making $150k, bill $800k. $800k/$400 = 2,000 hours of billables needed). Am I correct in how this works? Do firms set guidelines or targets for this?
3) What % of your actual hours worked are really billable? Is there typically a firm guideline, or minimum/expectation?
4) I've seen some guys on the internet (bc no one lies on the internet right?) claim they can have billable hours >100% of the hours worked. Is this true and is it common? How does one do this, are they double-booking hours for generic tasks that can apply to multiple clients like some basic market research or something?
5) Who logs/tracks these hours and how is it verified that this was true client work? Do you just keep track yourself and hand in a form at the end of the week to your staffer?
6) Do you bill in 6 minute increments like lawyers? Does 3min of work get rounded up to 6 min, or rounded down since it is not a full 1/10th of an hour?
I'll probably have a few more questions as I get these answered, but thanks everyone for taking the time to read and reply.
Best,
GordonGirthModel
Based on the most helpful WSO content, here are detailed answers to your questions about the billable hours model in consulting:
Translation of Billable Hours into Bonus:
Expected Billable Hours:
Percentage of Actual Hours Worked that are Billable:
Billable Hours >100% of Hours Worked:
Logging and Tracking Hours:
Billing Increments:
Feel free to ask more questions if you have any!
Sources: Comp/Culture/Hours etc at Tier 2 Consulting Firms?, MBB Analyst comp/hours ?, How is A&M perceived in the industry?, Death from Overwork (Karōshi) in Finance,
You would really need to specify what sort of "consulting" you are talking about here. MBB firms (which seem to make up most of the conversation on here) do not follow this model - the client isn't billed based on the number of hours you work, nor is your bonus directly tied to the number of hours you log.
Rx firms, to my understanding, have a model like you are describing, although I'm not familiar with the details.
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