pdf version - David Maister
pdf version - David Maister
pdf version - David Maister
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The Anatomy of a Consulting Firm<br />
Figure 4: The Economics of Guru Associates - 5 years later<br />
Level No. Utilization<br />
Available<br />
Hours to<br />
Bill*<br />
Billing<br />
Rate<br />
Billings<br />
Senior 10 75% 15,000 $200 $3,000,000<br />
Individual<br />
Salary<br />
Total<br />
Salaries<br />
Middle 20 75% 30,000 $100 $3,000,000 $75,000 $1,500,000<br />
Junior 50 90% 90,000 $ 50 $4,500,000 $32,000 $1,600,000<br />
Total $10,500,000 $3,100,000<br />
Contribution to Overhead and Profits =<br />
Billings - Salary Costs = $10,500,000<br />
($ 3,100,000)<br />
$7,400,000<br />
Assume overhead costs of $40,000 per professional:<br />
Overhead $2,560,000<br />
Partner Profits $4,200,000<br />
Per Partner $ 420,000<br />
* Based on a 2000-hour year<br />
Copyright 2005 <strong>David</strong> H. <strong>Maister</strong> Page 19 of 19 www.davidmaister.com
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