How much do high-end financial software consultancy firms (like lab49) charge per hour?


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How much do high-end financial consultancy firms (like lab49) charge per hour for a c# developer in London? In GBP please.

Obviously the consultancy has to paid the developer + cover their overheads + allocate profit for the investors.

I'm just wondering how the business model for a specialized financial software consultancy firm works as I'm thinking of starting one.

Thanks

Business Model Consulting Financial Rates

asked Jul 12 '11 at 06:06
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Jamesgold
11 points
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2 Answers


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Consultancy is a direct billable hours model. Here's how it works:

•Desired Salary / Yearly Hours Worked (i.e. 40 per week * 52 weeks = 2080 but substract vacation and training time)

•Suppose 75,000 / 2080 = $36.06 per hour is your company's cost.

•Gross up the $36.06 by a factor of 2 or 3.5. $36.07 * 3.5 = $126.25 •You'll charge the client $126.25 per hour. The margin goes to cover the overhead and company profit.

Now of course, High-end consulting firms charge much more than $126.25 per hour. It all depends on overhead, expertise, and marketing. Firms produce a lot of reviews and blogs so that they can establish themselves as Thought-Leaders on a particular subject. Essentially, you have to build your consulting practice by increasing the perceived-value of your information. You can increase perceived value by hiring successful practitioners, academics, and of course, by developing a proven model.

Check out the Boston Consulting Group. (they hire a ton of ivy-leaguers and successful practitioners)

Good Luck dude.

answered Jul 12 '11 at 23:03
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Rayce Rollins
91 points
  • Very good calculation imho. Just don't forget that there might be taxes to add to the 75k (at least in germany you have to add a good bunch of taxes to the base salary of 60k for a developer). I know from wellknown companies which charge 800 €/day for juniors, then 1000€, 1200 and above I don't know. – Christian 7 years ago

1

The going rate for a London city IT contractor (in banking / hedge funds) is £500 - £700 per day. This is for the independent (one man Ltd company) with 10 years experience in the field. The going rate for a Lab49 or thoughtworks style consultant is £600 (2 years exp) - £2000 (senior / PM level) per day.

Crazy isn't it?

However if you're a large corporation and you spend £200k developing a piece of software (200 man days at £1k/day) that saves your company £2million you can see where the value add is. Now what if that project facilitates you in transacting £20 million worth of business?

Consultancies like Lab49, thoughtworks etc tend to pay their staff a fraction of the income but as a permenant salary. Around 1/3 sounds right as one poster has mentioned. For instance, it is not uncommon for a 600pd Thoughtworks staff to earn £35k per annum plus pension and benefits. This sounds like a heck of a difference but do note that the staff is employed permenantly. If there are no projects paying that high rate they still get their salary, they get trained, holiday, sick pay and a pension etc...

The business model is one that people are the asset that are saleable by the hour, so long as they can solve complex problems. Thus consultancies tend to hire the smartest people early in their careers and offer them a reasonable salary but charge a very high rate. Less experienced consultants are often padded with more experienced at a ratio of 2:1 or more. The consultancy makes a good profit off their staff but the staff gains valuable experience.

Having worked for a consultancy (neither of the aforementioned) for three years I can tell you that they may not pay amazingly, but you do indeed learn heaps about being a professional, client-facing, high tech consultant!

answered Jan 2 '12 at 06:20
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