Net Multiplier
Net Fees Multiplier measures how many dollars of net fees you've billed for every dollar of direct labor spent, calculated as:
Net Fees Multiplier = Net Fees Billed ÷ Direct Labor
Net Fees Billed
Net Fees Multiplier depends on a related figure, Net Fees Billed:
Net Fees Billed = Gross Fees Billed − PWP Liability
Gross Fees Billed is the total amount you've invoiced. Subtracting PWP Liability removes the portion of that billed amount earmarked for consultants, leaving you with the billed fee that actually belongs to your firm's own work.
The Calculation
Once you have Net Fees Billed, divide it by Direct Labor to get the multiplier:
Net Fees Multiplier = Net Fees Billed ÷ Direct Labor
This tells you how many dollars of your own billed fee you're generating for every dollar spent on direct labor — a quick read on labor efficiency and pricing health.
Why It Matters
The Net Fees Multiplier is a fast benchmark for whether your billed fees are keeping pace with labor cost. A higher multiplier means you're billing more net fee per dollar of direct labor — generally a sign of efficient staffing, well-priced work, or both. A multiplier trending down over time can signal scope creep, underpricing, or labor spent on work that isn't converting into billings.
Because it uses billed figures rather than budgeted or contracted amounts, this multiplier reflects what's actually happened so far — not a projection.
Net Fees Billed vs. Net Fee — Don't Confuse These
Net Fees Billed is distinct from Net Fee:
- Net Fee is a contracted figure — Gross Fee minus Consultant Fees for a project or phase.
- Net Fees Billed is a billed-to-date figure — Gross Fees Billed minus PWP Liability.
Net Fee tells you what your firm's fee is worth on paper. Net Fees Billed tells you how much of that fee, net of consultant liability, has actually been invoiced so far.
Summary
Net Fees Multiplier is calculated as Net Fees Billed ÷ Direct Labor, where Net Fees Billed is Gross Fees Billed minus PWP Liability. It measures how efficiently billed net fee is being generated relative to direct labor spend, using actual billed-to-date figures rather than contracted amounts.