Contribution margin per hour
Contribution per delivery hour before SG&A—uses **`max(billRate, 0.01)`** so margin % stays finite when demoing edge cases.
Example scenario
A cloud advisory pod publishes a blended sell-side rate of $175 per client-facing hour on FY26 rate cards (“Client bill rate”). Workforce analytics allocates salary, benefits, payroll taxes, bench risk reserve, and allocated tools—excluding corporate SG&A—into a $92 fully loaded delivery cost rate (“Fully loaded cost”) for that consultant grade. That pairing yields an $83 contribution spread per billable hour before partner dividends and selling overhead, equivalent to roughly a 47.4% delivery-margin percentage on dollars billed—sanity-check realization discounts separately because this numerator assumes rack rates actually invoice.
Contribution margin per hour
(Bill rate − loaded cost) ÷ bill rate × 100
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How to calculate billable spread and delivery margin %
- Pull “Client bill rate” from the FY active rate card tier—usually blended staff/expert composite unless models isolate partner rack separately.
- Request Finance’s fully burdened hourly cost for that cohort—loaded salary plus allocable benefits, taxes, hardware amortization, and training—typed as “Fully loaded cost,” not raw wages divided by 2,080.
- Subtract to read “Spread per billable hour”—cash-contribution dollars available before selling, recruiting, and HQ allocations.
- Interpret “Delivery margin %” as contribution margin on invoiced dollars at rack; haircut bill rate when realization averages ninety-two cents on the dollar before presenting board-ready EBITDA bridges.
Billable spread & delivery-margin benchmarks
- Representative management-consulting bill-rate spreads versus burdened cost (North America)
- Healthy boutiques often protect mid-forties to low-sixties percent contribution on rack rates—heavy subcontracting or aggressive discounts compress spread fast
- Loaded-cost completeness benchmarks FP&A audits
- Finance-grade burdens typically include benefits load factor (~25–35%+ on salary), payroll taxes, PTO accrual, and allocated tech—excluding partner draws varies by partnership structure
- Realization drag versus rack-rate math
- Industry trackers cite perennial realization shortfalls—multiply gross spread by historical realization before translating margin percent into cash gross margin
Best use cases
- Growth and performance planning
- Budget and forecast scenario modeling
- Client-facing pre-qualification and education
Frequently asked questions
Should loaded cost include recruiter fees amortized per hire?
Only if Finance’s standard burden model spreads recruiting across production hours—some firms keep recruiting in SG&A. Match whichever methodology FP&A already uses for pricing councils.
Why doesn’t delivery margin tie to project gross margin in QuickBooks?
Project profit-and-loss layers subcontractor pass-through, overhead allocation methods, and write-offs differently. This calculator isolates employee rack minus burden—bridge gaps with realization and scope-change rows.
Can I mix offshore blended bill rates with onshore loaded costs?
Only when staffing mixes intentionally blend—otherwise split cohorts or spreads mislead pricing committees optimizing blended offshore/onshore pyramids.
Does partnership profit sharing belong inside loaded cost?
Partnership economics vary—some shops bury draws inside burden, others below EBITDA. Document treatment before comparing percentages firm-to-firm.
Glossary
Scenario modeling
Comparing multiple assumption sets to estimate potential outcomes before execution.
Conversion intent
User behavior that indicates readiness to take a commercial action such as signup or purchase.
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Category: Professional services finance & rate-card economicsTopics: Billable rate spread, Loaded labor cost, Contribution margin per hour
Last reviewed: 2026-05-07
Reviewed by: Calclet Growth Team