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Staffing Billrate Explained

Staffing Pricing Explained: What Goes Into a Staffing Company’s Bill Rate?

“Wait — isn’t your profit just the difference between what you charge and what you pay the employee?”

That’s one of the most common misconceptions about staffing agency pricing. And while it might seem straightforward, the reality behind a staffing bill rate is far more complex.

To be clear: what goes into a staffing bill rate isn’t a secret (really!), but it’s not exactly simple either. The confusion usually stems from the often-overlooked—and yes, admittedly dry—topic of calculating the true cost of labor.

What You’re Really Paying For

For every dollar an employee earns, there are additional costs required to keep them employed. These “loaded labor costs” (also known as the labor burden rate) include both direct and indirect expenses an employer must cover.

This isn’t just about paychecks. It’s also about federal and state taxes, workers’ comp, payroll administration, benefits, and more.

Beyond Wages: The Real Cost of Labor

Joe Hadzima, a senior lecturer at MIT, uses a simple but revealing formula to estimate total labor costs. He suggests that after accounting for taxes and benefits, the true cost of an employee is typically 1.25 to 1.4 times their base salary.

So, if someone earns $30,000 a year, they may actually cost an employer between $37,500 and $42,000 annually.

Staffing agencies are no different—we carry these same employer burdens for every temporary employee we place.

What the Data Says: The National Average

According to the American Staffing Association (ASA), the nationwide average net profit for a staffing agency is about 3.3% per hour.

Using an updated example based on a $18.00 hourly pay rate:

  • Hourly pay rate: $18.00
  • Estimated bill rate charged to the client: $27.27
  • Average net profit per hour: $0.90

Here’s the breakdown:

  • Employee wages: $18.00
  • Legally mandated labor costs (FICA, FUTA, SUTA, WC): $2.16
  • General & administrative expenses (G&A) at 18.7%: $6.21
  • Net profit (3.3%): $0.90

So that $27.27 bill rate covers everything—from taxes and insurance to overhead—leaving the staffing company with a modest profit of less than $1 per hour per employee.

It’s Not One-Size-Fits-All

Bill rates can vary significantly based on:

  • Geographic location
  • Industry specialization
  • Job type and risk level
  • Supply and demand for talent

While $27.27 is a good benchmark, each situation is unique—and so are the cost structures behind it.

Quick Guide: Common Staffing Billing Terms

Hourly Bill Rate
What the client pays per hour. It’s the sum of the employee’s pay rate plus the staffing company’s markup.

Hourly Pay Rate
What the employee earns per hour.

Legally Mandated Labor Costs

  • FICA (7.65%) – Social Security (6.20%) + Medicare (1.45%)
  • FUTA (0.60%) – Federal Unemployment Tax (may vary by state)
  • SUTA (4.00%) – State Unemployment Tax (varies by state)
  • WC (1.99%) – Workers’ Compensation (varies by state and role)

Mark-Up
The percentage added on top of the pay rate. It includes taxes, insurances, overhead, and service fees—but not pure profit.

G&A (General & Administrative Costs)
Average of 18.7%. This covers rent, utilities, internal staff wages, benefits, marketing, and more.

Net Profit
What’s left after covering employee pay, taxes, insurance, and operating costs. In this example: $0.85 per hour.

Want to Dig Deeper?

Now you know what really goes into a staffing bill rate! Want to run your own numbers? Check out these helpful tools: