Monday, August 1, 2011

Review of Billing Rates Should be an Ongoing Process

By Rick Gould, CPA, JD

Our 2011 Billing Rates & Utilization survey clearly showed that firms are focusing on raising rates. Billing rates are now averaging $513 per hour for CEO’s of agencies with $25 million or more in revenues, and $291 among smaller agencies, Agency VP’s average $261, with the highest among Washington DC agencies averaging $306 and SVP’s $356. I believe this uniform spike in billing rates is indicative of a marginally improved economy and is consistent with growth of the industry in both net revenues and operating profit.

Productivity, measured by billable time utilization has been far below optimal levels. Senior VP’s are billing out only 63% of their theoretical yearly capacity of 1700 hours. And while some rank and file account managers are averaging as high as 99%, some are averaging as low as 70%. The goal for account executives should be at least 90%, a goal reached by almost all firms achieving 20% profitability.

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