A one-man shop may have a single, never changing rate for his work. If he has one or more associates, they may be billed at the same or different rates, depending upon the qualifications and abilities of the individuals. Typically, Partners charge the highest rates and are presumed to have broader experience, greater knowledge, and ability to effectively perform or manage major assignments. Senior Consultants are priced somewhat lower, staff level engineers and consultants lower still, and drafters, statisticians and clerical employees below those. Proposals for performing work defined in a Scope of Work are generally based upon carefully determined estimates of the man-days required for each level of skill or ability, multiplied by the posted rate for each category of employee or staff.
Prudent firms add a modest contingency percentage.
Clients occasionally take a dim view of such surcharges, but the cost of money must always be considered in such dealings. If the consulting firm must make such expenditures, submit a statement or invoice, and await processing and payment by the client, there is an opportunity cost of such funds. Reimbursement for this and related administrative costs is reasonable. This is a question frequently posed by clients, and it is a reasonable one. As noted above, these are wide-ranging, ballpark figures for domestic work, but are not purely hypothetical.