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Another question on salary
6

Another question on salary

Another question on salary

(OP)
Hello all,

I'm a fairly new engineer with a little over a year experience working for a mechanical engineering design firm in Northern California. I am making a little less than 20% of what the company charges. I haven't been in this field long enough to know if that kind of pay range is what I should be getting. Any input/advices would be greatly appreciated. Thanks!

newengie

RE: Another question on salary

When I was a newish grad doing consulting work I was making about 20%-25% of my chargeout depending on the profit on the job.  About half of the chargeout was "overheads".

- Steve

RE: Another question on salary

i was 25%, as soon as i got my PE and SE i went to like 20%

LMAO

RE: Another question on salary

It depends on industry but 'charge out rate' can have very little relevance to what you personally get paid.  It depends on what overheads are lumped into the charge rate.  By company what is considered overhead and what is direct cost can vary.  It can also depend on what deals have been cut with the vendor etc.

At my first job in similar situation I was getting equivalent of maybe 25% give or take (different contracts had different charge rates).

I really don't see the obsession with comparing your pay to what the company charges for your time.  There are better ways to assess your pay.

KENAT,

Have you reminded yourself of FAQ731-376: Eng-Tips.com Forum Policies recently, or taken a look at posting policies: http://eng-tips.com/market.cfm?
What is Engineering anyway: FAQ1088-1484: In layman terms, what is "engineering"?

RE: Another question on salary

Start your own business and then you can start giving 99% of your chargeout to your employees and debtors.

RE: Another question on salary

(OP)
Steve, thanks for the reply.  

Most of my hours were charged to training for the first few months when I started.  Now that I'm sort of up to speed, I get told how many hours are expected of me for each project.  So, 20-25% is the standard?

RE: Another question on salary

That's not necessarily out of bed.  In defense, we have what's called the "wrap" rate, which includes the lights, your office space, your computer, the utilities, your office equipment, your benefits, your unemployment insurance, your supervisor's time, etc.

The list is quite long, and factors of 3x to 4x base salary are not unusual at all.

TTFN

FAQ731-376: Eng-Tips.com Forum Policies

RE: Another question on salary

2
newengie:

To be absolutely honest, all said and done, as of now, dont worry about your salary. Learn as much as you can and develop your skills. Make everyday of your job worthwhile and learn as much as you can. Money will eventually follow. No good can come out of trying to figure out how much you are worth. At least not in this early part of your career. My humble 2 cents.
 

"Does the man make the journey or does the journey make the man" - Mark Twain

RE: Another question on salary

newengie,

You can up this percentage significantly by contracting (at least in the UK).  But you'd need to be completely clear about the potential downsides.

- Steve

RE: Another question on salary

Some of my contemporaries left their permanent employment and returned next day as contractors.  Customers got charged the same.  The former employees earned more. Their lack of benefits (holiday mainly, healthcare is free here) was outweighed by the extra ££.

They were shown the door as soon as times got hard.  This was the downside.  Plus having to do all that boring tax return stuff.
 

- Steve

RE: Another question on salary

"They were shown the door as soon as times got hard.  This was the downside"
That can happen whether contract or not... I've been there in both positions.

David

RE: Another question on salary

I guess you're probably describing the benefits of living in the land of the free?

- Steve

RE: Another question on salary

Sompting, you really don't like America/Americans, do you?

Some of us are OK, I promise.

V

RE: Another question on salary

I love loads of things about America, loved my time living there and would do it all over again if I had a time machine.  I have many American friends too.

Employment contracts and healthcare though.  Yikes!
 

- Steve

RE: Another question on salary

"They were shown the door as soon as times got hard.  This was the downside"

I have been kept on as a contract employee when a direct was let go, but mostly the contractors are the first to go.

Peter Stockhausen
Senior Design Analyst (Checker)
Infotech Aerospace Services

RE: Another question on salary

Both really.

It is/was common for engineers here to set up their own companies and then go to work at the same place the next day.  The company thing is just for tax purposes.

- Steve

RE: Another question on salary

2
newengie....typical multiplier for a design firm is around 4 so you might be a little under with your 5 multiplier.  Prove your worth while the economy sucks, then think about moving up.  Wouldn't be wise to take a shot at the moment.

RE: Another question on salary

(OP)
Thanks to all the people who provided helpful information.  I appreciated it.  I'm not looking to request for any kind of salary increase in this kind of economy, but wanted to see how I am doing compared to you all when you were entry levels.  

Now that I realized I am underpaid, I'll know what kind of numbers would be reasonable to throw out there when the time is right.

EQguys,

Thanks for the great advice.  I like the company, I enjoy what I do, I have great mentors and I'm also learning at a good rate.  It's just that, while I'm at it, I'm also trying to bring home as much bacon as I can.   

 

RE: Another question on salary

Quote (newengie):

Now that I realized I am underpaid

That, or your employer is overbilling.  You don't "deserve" money based on what your employer is billing.  Such thinking would be in need of a good swift adjustment.

RE: Another question on salary

As usual, Tick is the voice of reason.

Maybe you suck at what you do, newengie. Not saying that you do, but theres a bunch of different reasons why the company pays you the percentage of the bill out that they do.

To think that you're underpaid because just because of your percentage of the billable rate doesn't really tell the whole story.  

V

RE: Another question on salary

(OP)
vc66,

I thought employers are always looking to pay the least possible?

RE: Another question on salary

They could be doing both; underpaying you, and overcharging the customer.  No two companies have the same cost structure or market, so there's no telling, simply from the multiplier, whether you are actually underpaid, relative to your peers in the same area and the same industry.

I know from previous experience that such cost multipliers can easily have 30% variance from company to company.

TTFN

FAQ731-376: Eng-Tips.com Forum Policies

RE: Another question on salary

The least possible for someone who is integral to the company is much more than the least possible for someone who is dead weight.*

*Assuming the same negotiation skills.

V

RE: Another question on salary

Employers are not always looking to pay as little as possible to employees.  Sometimes valued employees get paid more because they help the company make money.

RE: Another question on salary

Some get paid more because they can't be replaced, or at least the knowledge locked away in their heads can't be replaced. I'm sure my previous management had weighed up the balance between my occasionally argumentative attitude against my knowledge of the plant and ability to get it making money. The money always had the louder voice.
  

----------------------------------
  
If we learn from our mistakes I'm getting a great education!
 

RE: Another question on salary

I know from experience that such cost multipliers can easily have 30% variance within the same company.
In fact, within the same office as I'm now sitting.

It doesn't help my morale to know that a 'more valued' employee has a 15% larger salary with a 12% lower charge-out rate. As it is information that I'm not meant to know it's difficult to use as a bargaining chip.

Employers will often pay only as much as they think that they can get away with.

On the other hand, I'm earning a lot more now than I would without a job....

 

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