💹 Gross Margin Calculator (Local Staffing)
Gross margin measures profit as a percentage of the BILL rate, not the pay rate; it is how hospitals, VMS platforms, and finance teams think about staffing costs. When a client says 'we need 28% margin,' this tab from Dee's How To Charge workbook is where you calculate the bill rate that hits it: forward from pay and target margin, or in reverse from any bill/pay pair, with the equivalent markup shown so you can speak both languages.
Section 2 · Forward: I know my pay rate, I want a specific margin
The formula: Bill Rate = Pay Rate / (1 minus Gross Margin %).
What you pay the worker per hour.
The margin you want to guarantee. Standard: 25% to 35%. VMS contracts often require 28%.
Section 3 · Reverse: I have bill and pay, what is my margin?
What the client is paying you per hour.
What you are paying the worker per hour.
Estimates for planning, not financial or legal advice. The numbers are illustrations built from your inputs; your market, your state, and your carrier decide the real ones.
Does this resonate?
You speak margin now. Build the agency that bills it.
The platform's staffing roadmap takes you from this pricing math to signed contracts, with checklists for VMS registration and direct client outreach.
Build my launch plan free →Good questions about this math
What is the gross margin formula for staffing?
Bill Rate = Pay Rate / (1 minus target margin). A $20 pay rate at a 28% target margin needs $20 / 0.72 = $27.78. It is a divide, not a multiply; using a 28% markup instead would bill only $25.60 and silently miss the margin.
What gross margin should a staffing agency target?
The workbook's guidance is 25% to 35% before burden, and VMS contracts often require 28%. Remember these margins are before burden; your real keep is the margin minus employer costs, which is why the Burden Builder comes first.
What is the difference between margin and markup?
Same spread, two denominators. Margin divides by the bill rate; markup divides by the pay rate. A 55% markup is approximately a 35% gross margin. Hospitals and VMS platforms speak margin; learn both and you will never get caught off guard on a pricing call.
When should I use this instead of the Markup calculator?
Use this when the margin is the constraint: a VMS mandate, a finance team's target, or your own profitability floor. Use the Markup calculator when you are building a bill rate up from pay. They are two doors into the same room.
Do I get the Excel version?
Yes. The $27 one-time unlock includes the standalone Gross Margin (Local Staffing) workbook with every formula live plus the START HERE guide tab.
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