Profit markup on employment contracts

I need some help in trying to figure out approximately how much my employer is making off my contract.

My company is subcontracted by a larger firm. I work at my client's location so I would imagine the only thing that can be attributed is labor costs. I have limited interaction with my employer save for the weekly timesheets that are submitted. My paycheck stub lists the basics: social, unemployment taxes etc. Aside from the 5 week vacation, and they pay half my health insurance, I've no other discernible benefits from this company, no pension, no education assistance, etc. (yeah, I know I screwed myself over on those) .

As a generic figure if I earn 50K€ per year, how much would the company have to be paid to in order to consider the contract a profit making endeavor?

Depends a lot on what you do. If it is IT, then probably three times that or more if you are seriously specialized, but I doubt that as you would make more than that if you were.

Yes, its a specialized position, IT/Environmental, for a specific program and I do make more then the figure quoted. (Just needed something easier to calculate )

So basically, 150K€ to cover said position. Maybe 30%(?) labor costs and the rest is just gravy for the company? (Is the 30% too low for germany? Used to be the average back in the states. Well, years ago, that is)

At 65K, they break even. Anything over and the boss uses it take his family on several extended vacations, pay portions of his and the secretary's salary?

It is a bit more complicated than that because of gross and net. But yeah, between 3X net and gross for said subcontracted employee. One subcontracted employee should fund between the net and gross of three. If it is SAP, then all bets are off on those numbers. However, a SAP specialist would probably be better off freelancing.

Jab,

There is no way of answering your questions specifically as we haven't seen the contracts involved. But in general it sounds like you are working for a Employment/Contracting Agency so some questions and pos. answers are:

1. Did you get the job thru the agency and when you got the job were you asked what your rates were? If yes
2. Are you employed by this firm - really i.e. that if and when this contract finishes you get paid? If no
3. Where you interviewed by the Client firm at your rate? If yes

Then

It sounds like you a contracting/temping like many on TT. In general, firms source jobs via such Agencies but have no on-going contractual relationship (i.e. it's only for the job in-hand). Firms will source a job via such agencies letting them know what rate they are willing to pay i.e. 500 Euros to 750 Euros per day. So once you have given your rate they (the Firm) will interview based on your rate and experience. The Agency normally makes a mark-up on your rate say from 15 to 25%*. That's my experience of contracting and working for one of these Agencies.

This relationship is normal in the industry - pension and sick pay are your problem and one of the reasons why you tend to get paid shit loads of money!!!

Having said all that why don't you just ask them (the agency) what there mark-up is/are with the Client firm... or ask your client firm's HR department or the department that sources people...

* in the bank where I worked - we standardise the mark-up rates to bring down the costs for the bank...

as a project manager, I have seen most contractors on a mark up from an agency at between 9-15%, I have also worked for some of the big 4 where they have had permy staff on site and have charged well over 800% markup, I worked in Switzerland for one of these companies and they had 20 Argentinian ETL SAP consultants on site and they were paying them less than two hundred chf per pay and where charging them out at astronomic costs, i saw one invoice for 7k a day for a woman that was making more out of her living allowance than her pay.

I also walked out of a job when I found out the consulting firm was making 300% out of my skills, a lot of the time most firms are trustworthy and make a reasonable profit out of you...non of which is wrong, firms are not a charity, but some take the piss

@Scogs.

Great point, I forgot about consulting firms umbrella option. You are right they make huge mark-ups so when you come under their brand you are more expensive to firms that is once you have a Big 4 or another firm's stamp on your head - so the bull-shit goes!!!

The rates as far as I know for Consulting firms rates to Clients are around £1k per day for junior staff raising to £5k per day for more senior staff...

My guess is $5. Maybe $5.50.

More beer.

Thanks for the replies all...

Its a straight up environmental company, not a temp firm, although the majority of the projects are based on contractual work with clients. I was hired on as a contract employee specifically for this position only. Once this contract ends, I'm out of a job.

The only reason I'm with this firm is because they could obtain a work permit for me within the two week time frame to get me on the job. The primary employer (american firm) did not have the ability (nor the expertise) to get the paper work done without jeopardizing the start work date with the client, so they subcontracted to the german firm.

So basically, I think of myself as just a 'cash cow' for this firm as they did not 'recruit' me per se nor did they go out marketing for the contract work. It was more like, "you are being contracted to fill this position with this person only". It pretty much 'fell' into their bank accounts.

Given the range of numbers provided 9, 15, 25 and the whopping 300%, and all of your other comments I'll use a resonable amount of mark up of 30%. Based on what they are recieving from the primary firm, they are making a sh!tload off of this cashcow!! UGH!

The typical rate for "Lohnnebenkosten" or "Personalzusatzkosten" in Germany is 100%, so it costs the company double what you actually receive gross to employ you. I'm not sue if this is also applicable for contracted employees, though.

the actual contributions an employer has to make are about 41% of your gross. The rest is made up of other sundry costs of employment but they vary considerably from company to company.

If you are referring to health/pension/unemployment insurance, then 41 % are the total contributions, which are roughly shared 50/50 between employer and employee (i.e. for the employer, they imply only 20 % on top of the gross, because the other 20 % are paid out of the gross).