Last updated: October 21, 2026
By Robert Ardell, Co-Founder and Strategic Advisor, KORE1
Compare staffing quotes on the all-in hourly bill rate, not the quoted markup, because one 35% can mean $135, $159, or $167.40 an hour on the same $100 of pay. What changes is the number the percentage is applied to, and whether the 24% employer burden gets billed on top. Over a 13-week contract at 40 hours a week, the gap between the lowest and highest reading is $16,848.
Picture the inbox on decision day. Three quotes for the same contract developer, same start date, same length. Two of them say 35% markup. The third gives you one hourly number and no percentage at all.
Which is cheapest? You can’t tell yet. That’s the trap.
Devin Hornick, a partner at KORE1, describes the pattern bluntly. “There’s sort of the bait and switch in the staffing industry. And you really need to ask the right questions.” I’d add the part that makes it hard on a buyer, which is that nobody has to be lying for this to go wrong. A percentage on its own is an unfinished sentence.
I co-founded a staffing firm, so I’m the wrong person to call neutral. What I can do is hand you the arithmetic and a worksheet, and you can run our quote through the same sheet as everyone else’s. The method works for any role, though the benchmark figures further down are for software engineers. If you’d rather hand the pricing to someone, our contract staffing team will itemize a quote on the same sheet.
Why Do Two Quotes With the Same Markup Produce Different Invoices?
Because a markup is a percentage, and a percentage needs a base. Start with $100 an hour of contractor pay and a 24% employer burden, which is $24 an hour of payroll taxes, workers’ compensation, liability coverage, and required sick pay. Now add a quoted markup of 35%. A firm can mean that three different ways.
| How the 35% is read | Formula | Hourly bill rate | 13-week cost (520 hours) |
|---|---|---|---|
| 35% over pay, with the burden paid out of it | pay × 1.35 | $135.00 | $70,200 |
| 35% on pay, with the burden billed separately | pay × 1.35 + burden ($24) | $159.00 | $82,680 |
| 35% on loaded cost | pay × 1.24 × 1.35 | $167.40 | $87,048 |
Same words on the quote, three different invoices. The gap is $32.40 an hour between the first row and the last, and across 520 hours that’s $16,848. Nobody would sign a contract with a $16,848 blank in it, and a bare percentage is exactly that. Start from an index number instead. The bill rate range for your role and metro gives you something to hold each quote against.
Look at the first row again, because it’s the one that should make you curious rather than relieved. If the firm pays the $24 burden out of its own 35%, it keeps $11 an hour. It may be fine with that. Or the quote may be missing something that turns up later as a line item.
Markup is the percentage a firm adds to its cost to set a price. Margin is the share of the final price the firm keeps. They are never the same number, and burden moves both, which is why a percentage alone tells you almost nothing about the invoice that will land on your desk.
A 35% markup on pay works out to a 25.9% margin on the $135 bill (35 divided by 135). Devin put the whole thing in three beats. “First off, it’s not a markup. Secondly, there’s a margin in there. And thirdly, there’s a bunch of other costs that you’re not thinking of.”
What Does a Contract Bill Rate Actually Pay For?
Round numbers, the way Devin walks people through it. A contractor earns $100 an hour. Burden, modeled at 24% in every example on this page, adds $24, so loaded cost is $124 before the staffing firm earns a dollar. The bill rate on that pay would likely land around $150 to $160 (Devin Hornick, Partner, KORE1, October 2026).
The 24% isn’t a fudge factor. Employer Social Security tax is 6.2% on wages up to $184,500 in 2026, and Medicare adds 1.45% with no cap, according to IRS Publication 15. Federal unemployment tax is 6.0% on the first $7,000 of each worker’s pay, though most employers end up at 0.6% after the state credit, per IRS Topic 759. Then come state unemployment, workers’ compensation, general and professional liability coverage, and sick pay. California requires at least 40 hours or five days of paid sick leave a year, and the entitlement exists whether the assignment runs six weeks or six months.
Burden shifts by state and by job class, so 24% is the figure this page uses and not a law of nature. The contractor burden rate page covers what it includes, line by line.
Which brings us to the first question for any quote. Is your percentage applied to the pay rate or to the loaded cost? A firm that answers in one sentence has done the math. A firm that changes the subject has some explaining to do, and you want that explanation before the contract and not after the first invoice lands in accounts payable.
Which Line Items Get Left Out of a Quote?
Six, in roughly the order they bite.
- Overtime. California counts hours past eight in a single workday, not only past 40 in a week, and requires double time past 12, according to the California Department of Industrial Relations. So ask whether the premium is billed at 1.5 times the bill rate or at 1.5 times pay plus burden. Both are common. They don’t produce the same invoice.
- Holidays, and whether the hours a contractor doesn’t work still show up on your invoice. The worksheet below counts three paid holidays in a quarter, 24 hours.
- Sick pay is a cost whether or not anyone prints it. The only open question is whether it sits inside the rate or gets billed when someone is out.
- Background checks and drug screens, usually a one-time pass-through. Ask for the amount.
- Equipment. A laptop, a license seat, a badge, a VPN token, any of which can arrive as a line on the first invoice.
- Payment terms. The contractor gets paid every week whether or not you’ve paid the firm (KORE1 pays on Fridays), so ask what the invoice terms are and whether a late charge exists. That line only surfaces when accounts payable is late.
How Do Conversion Terms Change the Real Cost?
A conversion clause is the price of keeping a contractor you’ve already trained. Some firms charge nothing after a set number of hours. Some charge a percentage of salary that shrinks over time. Some charge a flat fee at any point. Three different products wearing one name.
KORE1 lets a contractor convert to your payroll at no additional fee after 1,040 hours, which is 26 weeks of full-time work. The threshold has real weight. Among KORE1 contract-to-hire placements, 37.5% converted to direct employment (n=552), so if you’re a buyer who might hire the person, the fee schedule is the clause you will actually use.
Put it on the sheet, tiered by hours. In the worksheet below, Firm C is the cheapest of the three by a wide margin. Then its conversion fee goes in. The contract-to-hire vs direct hire cost breakdown shows what a fee like that buys, and our guide on how to vet a staffing agency has the exact ask, a conversion fee schedule in writing, tiered by hours worked.
How Do You Normalize Three Quotes Into One Number?
The formula is short. Cost per hour delivered is the total you pay, bill rate times hours billed plus any one-time extras, divided by the hours the contractor actually works, and it is the only number on this page that lets a flat $150 quote and a “35% markup” quote sit next to each other without a translator.
Before anything goes in the grid, every percentage has to become an hourly rate, using the three readings above. Then all three firms get the same expected hours, which for a quarter is 13 weeks at 40, or 520. Extras go in next. Hours nobody works come out of the divisor, and a conversion fee goes in if you expect to pay one. The blank template comes first.
| Line item | Firm A | Firm B | Firm C |
|---|---|---|---|
| Headline number quoted | |||
| What the percentage sits on | |||
| All-in hourly bill rate | |||
| Overtime multiplier and what it applies to | |||
| Holiday hours billed | |||
| Sick pay inside the rate or billed | |||
| Background check and screening | |||
| Equipment and licenses | |||
| Invoice terms and late charge | |||
| Conversion fee if you hire at month 3 | |||
| Total for the expected hours | |||
| Cost per hour delivered |
Now the same grid, filled in. Firms A and B both say “35% markup,” Firm C quotes $150 flat, and all three sit on $100 of pay and a 24% burden.
| Line item | Firm A | Firm B | Firm C |
|---|---|---|---|
| Headline number quoted | 35% markup | 35% markup | $150 all-in |
| What the percentage sits on | Pay, burden billed separately | Loaded cost ($124) | Not applicable |
| All-in hourly bill rate | $135 + $24 = $159.00 | $167.40 | $150.00 |
| Holiday hours billed | Yes, 520 hours billed | No, 496 hours billed | Yes, 520 hours billed |
| Background check | Included | $75 | $90 |
| Conversion fee if you hire at month 3 | Not quoted, ask | Not quoted, ask | $18,000 |
| Total for 13 weeks, before any conversion fee | $82,680.00 | $83,105.40 | $78,090.00 |
| Cost per hour delivered (496 hours) | $166.69 | $167.55 | $157.44 |
Read it slowly. Firms A and B, both “35%,” land 86 cents apart per hour delivered, but only because B skips the holiday hours and A bills them. Their hourly rates are $8.40 apart.
Firm C comes out lowest at $157.44. That’s $9.25 under Firm A and $10.11 under Firm B. Then you plan to hire the contractor at month three. Firm C’s $18,000 fee takes its total to $96,090, or $193.73 per hour delivered, and the ranking flips. A and B haven’t said what they charge before hour 1,040, which is exactly why the row stays on the sheet. An empty cell is a question for the firm.
Want a fourth quote built on the same sheet? Tell us the role, level, metro, start date, and length, and we’ll send an itemized bill rate you can drop into the blank column. Get a bill rate quote for the seat you are pricing.
Is the Lowest Bill Rate the Cheapest Quote?
Not by itself. Rarely, in fact. Firm C had the lowest rate and the lowest cost per hour delivered, and one conversion clause reversed it. Before you even start the worksheet, though, check each hourly rate against a benchmark, so a rate that’s too good doesn’t get to the sheet unquestioned.
| Software engineer level (United States) | Bill rate range | Median | 3-month cost |
|---|---|---|---|
| Junior | $77 to $96 | $83 | $43,400 |
| Mid-level | $96 to $122 | $108 | $56,100 |
| Senior | $118 to $142 | $131 | $68,300 |
A mid-level software engineer quote of $108 an hour is dead center. One at $79 sits below the bottom of the band, and the questions write themselves. What does the burden cover? Is the worker a W2 employee of the firm, or a subcontractor of a subcontractor (the W2 vs C2C vs 1099 page explains why that matters)? Is the person really mid-level? Above the band deserves its own question, usually a scarce stack, a premium metro, or a clearance.
That’s also why the $100-pay example in this article sits outside the table. A $159 bill rate is a specialist seat, not a mid-level software engineer. The numbers were picked to make the formulas visible. For metro cells, and for how Southern California placements compare with the national line, see our guide to tech contractor hourly rates in 2026.
What Should You Ask Before You Sign?
Five questions. Send them in an email before the call so the answers are in writing. Memory on a phone call is kind to the person selling.
- Is your percentage applied to pay or to loaded cost, and what is the all-in hourly bill rate at 40 hours?
- What gets billed on top of that rate? Overtime, holidays, screening, equipment.
- If I want to hire this person, what does it cost, and at what hour does the fee go to zero?
- When do you pay the contractor, and what are your invoice terms?
- Will you show me how you make your money?
The last one sorts firms faster than the other four. Devin’s advice is to work with “a firm who’s willing to show you how they make their money and not hide anything.” A firm that does will answer the first four without flinching. One that doesn’t has just answered all five.
Questions Buyers Ask Once the Quotes Are In
When a firm says 35%, does that include payroll taxes and insurance?
Only if the firm says so in writing. A bare percentage can sit on pay alone, on pay plus burden, or on loaded cost, and on $100 of pay those three readings bill $135, $159, and $167.40 an hour.
Ask which one, then ask for the all-in hourly rate in writing.
What belongs in an all-in bill rate?
Wages, employer payroll taxes, workers’ compensation and liability insurance, required sick leave, weekly payroll, and the firm’s own costs and profit all sit inside it.
Overtime premiums, screening fees, equipment, and conversion fees are usually separate lines, so ask for each one by name. If the firm says they’re all included, ask for that sentence in the contract.
Do conversion fees change which quote wins?
If you might hire the contractor, they can reverse the ranking. In the worksheet above, the cheapest firm per hour delivered ($157.44) climbs to $193.73 once an $18,000 fee is added at month three.
Get the schedule in writing, tiered by hours. KORE1’s own threshold is 1,040 hours, after which a contractor converts at no additional fee.
Three quotes in three formats. How do I get them to one number?
Divide total cost by hours delivered. Total cost is the bill rate times hours billed, plus one-time extras and any conversion fee you expect to pay, and hours delivered are the hours the contractor actually works.
Convert every percentage to an hourly rate first. Then use the same expected hours for every firm, 520 for a 13-week contract at 40 hours a week, so the comparison is one seat against one seat.
Is the cheapest bill rate ever the right pick?
Sometimes, when the rate sits inside the benchmark band, the extras are on the sheet, and the conversion terms are in writing.
Then the lowest rate is a perfectly good winner. Below the band the question changes to what is missing from it.
Your Fourth Quote
Build the sheet before the vendor call, not after. Fill in the blank template, hold every firm to the same 520 hours, and leave a cell empty until somebody answers it. Empty is fine. Guessed is not. If staff augmentation is what’s on your desk, the same method applies to a staff augmentation cost comparison, only with more items in the extras row.
The KORE1 Contract Rate Index refreshes quarterly, with the next update in January 2027 when new placements and the next BLS release come in. To get a number to set beside the other three, talk to a KORE1 recruiter about your role, level, metro, and start date.
