The charge-out rate assumes 1,500 billable hours. Last year delivered 1,280.

Nobody discounted, no job overran, and margin still fell. The leak is often hiding inside the rate every quote is built from.

By Steve 5 min read
Abstract bridge artwork for The charge-out rate assumes 1,500 billable hours. Last year delivered 1,280.

A recurring pattern in service businesses: win rates are stable, discounting is disciplined, jobs come in close to estimate, and gross margin still slides two or three points a year. Everyone hunts for the leak in delivery. It is usually upstream, in the arithmetic that produced the charge-out rate in the first place. Most rate cards are built by absorption. Take the overhead you need to recover, divide it by the volume of billable activity you expect to sell, add that to direct labour cost, apply a margin. It is…

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