July 23, 2021

Identifying Hidden Factors Driving Bill Rates Up: An Introduction

Jason Ezratty
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We may not explicitly call our mental reference points “benchmarks,” but humans use implicit benchmark comparisons when doing just about everything (e.g., did I beat my typical commute time this morning?).  Benchmarks define the bounds of what is common, normal, or standard.  Whether planning, operating, or assessing, benchmarks provide a basis of comparison and a waterline of expectation.  In our everyday lives we are even accustomed to handling exceptions to our mental benchmarks:

• $19.99 seems high for a plastic-wrapped turkey sandwich, unless you’re in an airport;

• an hour seems slow to drive one mile, unless you’re crossing midtown Manhattan;

• and a $125/hour bill rate may seem high for a registered nurse’s contingent assignment, unless we are experiencing a global pandemic.

Factors that consistently drive prices up above normal are sometimes called premiums.  Sometimes they are obvious, like in my examples above.  More often, and especially in the world of contingent workforce rate management, it is not just one factor but several—all the “it depends” factors on bill rates.  For example, does your prospective Java developer need to know MongoDB, live in Austin, work for only a 2-month assignment, sourced non-competitively?  Each of these premium-causing factors can have a substantial impact on the bill rate.

Just as understanding our mental benchmarks and exception cases about our turkey sandwich or our commute is clarifying, understanding the benchmarks and exception cases to bill rates is also clarifying.

The three general areas where Brightfield finds most contingent workforce bill rate premiums are in characteristics of the specific Role, Market, and Customer:

The Role.  Premiums related to the job itself are things like hard-to-find skills, at expert levels, in hot job titles, with fancy certifications, and a little Top-Secret Clearance thrown in.

The Market.  Market premiums are things like Tier-1 cities, with rising inflation, in a hot industry, with positive seasonal trends, a thin concentration of qualified suppliers, and daunting metrics on fillability (the likelihood of filling the assignment anytime soon).

The Customer.  The customer plays a part in driving bill rates up, too—requesting lots of positions at once, marking everything urgent, by inexperienced managers, who need to see tons of candidates, and use their favorite supplier for every role.

The impacts from these premiums can be significant.  In volatile markets like the current one, separating baseline bill rates from premiums is foundational to effective bill rate management.  Over the coming weeks, I’ll be writing about different premiums in contingent workforce bill rates from the Role, Market, and Customer vantage points.  Let me know if you have any premiums you’re curious about, and I’ll try to cover them in a future post.

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