Net Fee Calculation
Net Fee is a project or phase-level figure, calculated as:
Net Fee = Gross Fee − Consultant Fees
The Calculation
Net Fee starts with the Gross Fee for a project or phase — the total contracted fee, including any subconsultant work — and subtracts the Consultant Fees allocated to that project or phase. What remains is Net Fee: the portion of the fee that belongs to your firm's own work.
For example, a project with a $32,200 Gross Fee and $8,200 in Consultant Fees has a Net Fee of $24,000.
Why It Matters
Net Fee reflects what your firm actually needs to cover its own labor, overhead, and profit on a project — independent of money that simply passes through to subconsultants. This is the figure used for budgeting hours, calculating Fee Burn, and evaluating profitability at the project or phase level, since it isolates your firm's fee from consultant pass-throughs.
Net Fee vs. Net Revenue — Don't Confuse These
Net Fee is easy to conflate with Net Revenue, but they're calculated differently and apply at different levels:
- Net Fee applies at the project or phase level and only subtracts Consultant Fees from the Gross Fee.
- Net Revenue is a company-wide figure that subtracts both Consultant Fees and Direct Expenses from Gross Revenue.
Net Fee does not account for direct expenses — only Net Revenue does. Use Net Fee when working within a specific project or phase; use Net Revenue when evaluating overall company profitability.
Summary
Net Fee is calculated as Gross Fee minus Consultant Fees, at the project or phase level. It represents the fee your firm keeps for its own work after subconsultant costs, and is distinct from Net Revenue, which is a company-wide calculation that also nets out direct expenses.