Vendor chain rate calculator

Last updated 2026-10-22

Short answer

Each layer in a vendor chain keeps a share of the rate it bills, so the consultant’s rate is the end-client rate after every cut and your employer’s split. With a $100 client rate, a 10% prime, an 8% sub-vendor and an 80/20 split, the consultant receives $66.24.

Rates shrink as requirements pass down a chain of vendors, so a rate that looks fine at the top can leave little at the bottom. Add each layer and your employer’s split, or work backwards from the rate you need.

Takes $10.00, leaves $90.00

Takes $7.20, leaves $82.80

Rate reaching the employer

$82.80

Consultant rate after the split

$66.24

Share lost along the chain

33.76%

$33.76 an hour

Work backwards

With these layers and split, the end client must pay about $98.13 an hour.

Each percentage is the share of the rate that layer receives, applied in order. The defaults are examples.

What the calculator does

Flexible enough for real chains.

  • Up to five layers, each named and set as a percentage of the rate or a dollar amount per hour.
  • Your employer’s split to the consultant, such as 80/20 or 70/30.
  • Rate after each layer, share lost along the chain and dollars per hour taken.
  • A work-backwards tool: the end-client rate needed for the consultant rate you want.

The formulas

Layers are applied in order, top to bottom.

  • Rate after a percentage layer = rate × (1 − that percentage).
  • Rate after a dollar layer = rate − that amount.
  • Consultant rate = rate reaching the employer × split.
  • Share lost = (client rate − consultant rate) ÷ client rate.

Worked example

The end client pays $100. A prime keeps 10%, leaving $90. A sub-vendor keeps 8%, leaving $82.80. An 80/20 split gives the consultant $66.24, so the chain and the split take $33.76 an hour, about 34%.

Why it matters to a small firm

Margins that look normal at each layer compound. Before you submit, ask how many layers sit above you and check that the rate left works for the consultant and for you.

Frequently asked questions

Are these margins typical?

No standard exists. Margins vary by client, volume and relationship. The defaults are examples to show how the math works.

How do I find out how many layers there are?

Ask the vendor who holds the contract with the end client and who you would invoice.