I've read through most of the threads, and the responses here are interesting. While some people have made cogent points about the role of prestige in consulting (this being the reason firms like McKinsey can charge what they do), I really don't think that the pay differential is as reasonable as people tend to think. In general, I think it's unreasonable and extractive. Most businesses aren't McKinsey.
From what I've seen and lived, there is, at best, a weak correlation between someone's pay rate and what they're billed at. One company I worked at charged 5x my rate for projects. It was usually explained away as "a blended group rate." More often than not, I was the only developer on those contracts.
I wouldn't claim to be an expert on the economics involved, but I'd wager that the pay rate/bill rate ratio is, in most cases, due to layers of management, and a lack of transparency and automation. I'm trying my hand at combatting this at the startup/coop I founded. If anyone is interested in chatting about this, screaming at me about how I'm wrong, or learning more about the business, send me an email at [email protected].
From what I've seen and lived, there is, at best, a weak correlation between someone's pay rate and what they're billed at. One company I worked at charged 5x my rate for projects. It was usually explained away as "a blended group rate." More often than not, I was the only developer on those contracts.
I wouldn't claim to be an expert on the economics involved, but I'd wager that the pay rate/bill rate ratio is, in most cases, due to layers of management, and a lack of transparency and automation. I'm trying my hand at combatting this at the startup/coop I founded. If anyone is interested in chatting about this, screaming at me about how I'm wrong, or learning more about the business, send me an email at [email protected].