Based on that labor category, we have three employees that fit into that Web Developer Level 1 labor category based on roles and responsibilities, experience, education etc.
Assume Range of Salaries for that Labor Category are $60,000 to $80,000. Assume that our multiplier to include profit, G&S, fringe etc, is 2
Employee 1 makes $65,000,
Employee 2 makes $72,500
Employee 3 makes $80,000
We used the median salary to calculate the Labor Rate, 69.72 which includes profit that is fair and reasonable (5%)
When we charge the gov't $69.72 for Employee 1, we make additonal profit, for Employee 2 we make 5% and for Employee 3 we make no profit, in fact lose money.
I've been told the gov't doesn't want us to lose money soo..
If we use the top range to calculate the labor rate,then Employee 1 and 2 will have additional profit (over 5%)
In fact, the profit is 20% for Employee 1 which seems unreasonable.
So how are we to establish a labor rate for a labor category with a range of salaries and not loose money but not make too much money. It seems like using labor categories with a single rate which is typically what the gov't asks for doesn't make sence and we should offer a different rate for every employee using the same multiplier, to ensure that we don't lose money but make a fair and reasonalble proft.
This woudl be fine for a contract with a few employees but not one where I have 30 - 40 employees.
Not sure how to calculate the rate?
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