I (my company) currently does engineering consulting for another company (we'll call XYZ). For a long time it was just me doing the work and I billed them hourly at an agreed on rate. I have another employee that is now doing some of the consulting work. Due to the close relationship between my company and XYZ, the way it was initially set up is that even though my company employs the other person (an intern type position), I bill company XYZ a reduced rate for the work he does. There is a line item on the invoice for my hours at the full rate, and a line item for the intern's hours. He fill out an XYZ timesheet, even though XYZ does not pay him directly. The intern rate is higher than what I pay him, so I make a little there.
I'm looking to expand and get another employee as there is more work I could be picking up from XYZ. But I'm thinking I don't like the current billing setup. I just think XYZ has all the benefits of having an employee without any of the overhead. I mean when you hire a law firm, you don't get billed less because a paralegal did the paperwork, not an attorney, do you?
Just wanted to get people's thoughts/opinion, and maybe find out what the norm is for this kind of situation. I'm thinking I want to go to a single hourly rate. In the end I'm responsible for the quality of work that goes out, so how it gets done should not be XYZ's concern as long as it's right and done on time. But then do you still bill hour for hour at the higher rate when an employee does the work or do you say "well he doesn't work as fast as a more senior guy so I'll only bill .75 hours for every hour? Or am I just overthinking?