Net Multiplier
Net Multiplier = Net Service Revenue Direct Labor Cost
• The actual mark-up that firms achieve on direct labor costs. • Most firms have a target multiplier – their standard billing rates are constructed using it. • The income statement shows realized Net Multiplier. • High net multipliers are signals of pricing power and fee discipline
Fast Growth Firm Median
Very High Profit Firm Median
2017 2018 2019 2020 2021
Survey Median
3.02 2.81 3.04
3.08 3.08 3.17 3.09 3.02
99
THE PRINCIPALS ACADEMY 2022
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