Client Repricing / Margin Recovery

Why this comes up

Loaded cost on an existing account rarely stays flat, a pay raise, a benefit change, a workers' comp rate adjustment all push it up. If the bill rate doesn't move with it, margin quietly erodes. This engine reuses the same required-bill-rate math as pricing a brand-new account, applied to an existing one that needs a rate reset.

How we calculated this

Reuses the exact same formula as Staffing Bill Rate, applied to the new (increased) loaded cost:

Required New Bill Rate = New Loaded Cost / (1 - Target Margin - Variable Fee Rate)
Rate Increase Needed = Required New Bill Rate - Current Bill Rate
Annual Dollar Impact = Rate Increase Needed x Billable Hours

Worked example: loaded cost rising from $29.50/hr to $32.80/hr, current bill rate $43.38/hr, 30% target margin, 2% program fee, 2,080 annual billable hours.

Required New Bill Rate = 32.80 / (1 - 0.30 - 0.02) = $48.24/hr
Rate Increase Needed = 48.24 - 43.38 = $4.85/hr
Annual Dollar Impact = 4.85 x 2,080 = $10,099/year

What this means

• The rate increase needed isn't just the raw cost increase (loaded cost rose $3.30/hr, but the required bill rate increase is $4.85/hr), since the increase also has to clear the margin and fee percentages, not just pass through dollar for dollar.
• The annual dollar impact is the concrete figure to bring into a client conversation, the actual revenue at stake if the rate isn't adjusted, not just an abstract margin percentage.
• If the client won't accept the full increase, this engine tells you exactly how much margin erosion results from any partial increase, run the numbers again at whatever rate is actually negotiable.

Common mistakes

• Passing through only the raw dollar cost increase to the bill rate, rather than solving for the rate that actually recovers target margin after fees.
• Not converting the hourly rate increase into an annual dollar figure before the client conversation, understating the real stakes of the negotiation.
• Waiting too long to reprice after a cost increase, letting margin erode for months before addressing it.

Frequently asked questions

How is this different from Pay Raise Pass-Through?

Pay Raise Pass-Through is specifically about a worker's pay change and offers two modes (preserve margin or preserve contribution dollars). This engine is the general repricing case for any loaded-cost increase, solved once at your target margin.

What if the client rejects the full increase?

Re-run this with a lower target bill rate to see the resulting margin, so you know exactly what you're accepting if you settle for a partial increase.

Should I reprice reactively or proactively?

Proactively where possible; check loaded cost against current bill rate periodically rather than waiting for margin erosion to become visible in your financials.

Limitations

Assumes the same program fee rate and billable hours apply after repricing; if either changes as part of the negotiation, recompute with the new figures.

Next decision

• Weigh this against what retaining the client at any rate is worth

Learn more

What Goes Into Staffing Labor Burden? — the components that typically drive a loaded-cost increase in the first place.