What is the difference between staffing markup and gross margin?

Gross margin is the profit spread divided by the client bill rate, while markup is the profit spread divided by the employer burdened cost. For example, a $40 burdened cost billed at $53.33 has a 25% gross margin but a 33.3% markup.

What is a typical payroll burden percentage for staffing agencies?

The typical US staffing payroll burden ranges between 13% to 22% of wages. This includes FICA (7.65%), FUTA (0.6%), state unemployment SUTA (2-5%), workers' compensation insurance (1-6%), and general liability.

What is a standard staffing bill rate multiplier?

Standard staffing multipliers (Bill Rate divided by Pay Rate) typically range from 1.40x to 1.65x for professional IT and administrative staffing, and up to 1.75x to 2.0x for specialized healthcare or high-risk industrial staffing.

Staffing Agency Bill Rate & Payroll Burden Calculator

Pricing & Payroll Burden

Candidate Hourly Pay Rate

$ / hr

W2 hourly wage paid directly to the contractor or employee.

Pricing Calculation Model

Target Gross Profit Margin (%)

% Margin

Staffing industry average is 20% to 30% gross margin.

Target Markup (%)

% Markup

Markup applied on top of the fully burdened employee cost.

Employer Payroll Burden Breakdown 15.0% Burden

FICA (SS + Medicare)

FUTA (Federal Unemp.)

SUTA (State Unemp.)

Workers' Comp Insurance

General Liability & Admin Overhead

Annualized Contract Hours

hrs / yr

Standard full-time year = 2,080 hours (40 hrs/wk x 52 weeks).

Target Client Bill Rate

$0.00 / hr

Multiplier: 0.00x Pay Rate

Financial Metric	Value
Candidate Base Pay Rate	$0.00 / hr
Employer Payroll Burden (15.0%)	+$0.00 / hr
Total Burdened Employee Cost	$0.00 / hr
Hourly Gross Profit Spread	+$0.00 / hr
Effective Gross Margin %	0.0%
Effective Markup over Burdened Cost	0.0%
Annualized Gross Profit (2,080 hrs)	$0.00
Total Annual Client Billing	$0.00

Margin vs Markup Math: Gross Margin is calculated as (Bill Rate - Burdened Cost) / Bill Rate. Markup is calculated as (Bill Rate - Burdened Cost) / Burdened Cost. A 25% margin requires a 33.3% markup!

How Staffing Agency Bill Rates Are Calculated

In the staffing and recruiting industry, setting your client bill rate isn't just about adding a random percentage on top of what the worker earns. You must account for statutory payroll burden—the mandatory taxes and insurance that an employer must pay by law before making a single dollar of profit.

The standard formula used by staffing firms is:

            Target Bill Rate = (Pay Rate × [1 + Burden %]) / (1 - Target Gross Margin %)
        

Understanding the 5 Components of Payroll Burden

1. FICA (Federal Insurance Contributions Act): Mandatory 6.2% for Social Security (up to annual wage base) plus 1.45% for Medicare, totaling 7.65%.
2. FUTA (Federal Unemployment Tax Act): Net federal unemployment rate of 0.6% on the first $7,000 of wages.
3. SUTA (State Unemployment Tax Act): Varies by state and employer experience rating, typically ranging from 1.5% to 5.4%.
4. Workers' Compensation: Insurance coverage based on risk classification code. Professional/IT clerical desks typically pay 0.5% to 1.5%, whereas light industrial staffing can exceed 5% to 8%.
5. General Liability & Payroll Admin: E&O insurance, payroll processing software fees, and onboarding admin costs (typically 2% to 3%).