How the day rate is calculated
Day rate = (Income goal + Business costs) ÷ Billable days × (1 + buffer)
There are about 260 weekdays in a year. Take away holidays, public holidays and sick or training days to get your working days, then multiply by your utilisation – the share of those days you actually bill a client. Few contractors bill 100%: gaps between contracts, sales calls and admin all take time.
Worked example
A consultant wants $75,000 before tax and has $8,000 of business costs. She takes 25 days' holiday, 10 public holidays and allows 5 sick or training days: 260 − 40 = 220 working days. At 80% utilisation she bills 176 days.
- Break-even day rate: $83,000 ÷ 176 = $472
- With a 10% buffer: $519 a day – about $65 an hour over an 8-hour day
Converting between day rate, hourly rate and salary
- Hourly to day rate: hourly rate × hours in your working day (usually 7.5 or 8).
- Salary to day rate: a common rule of thumb is that a contractor day rate should be at least salary ÷ 220 × 1.5 to cover the holidays, benefits, pension and job security an employee gets for free. See the salary to hourly calculator.
- Day rate to hourly: divide by the hours in the day. Clients comparing quotes often want both.
Day rate or hourly rate?
Day rates suit on-site work, workshops and longer engagements: the client buys your day, and you are not penalised for working efficiently. Hourly rates suit small, interrupt-driven tasks. Many freelancers quote both, and the hourly rate calculator gives you the hourly side. Track the days you work with the time tracker and bill them with the invoice generator – one line per day, quantity = days, rate = your day rate.
Frequently asked questions
How many billable days are there in a year?
Around 260 weekdays minus holidays, public holidays and sick days leaves roughly 210–225 working days. At realistic utilisation most freelancers bill 160–200 days a year.
How do I convert a salary to a day rate?
Divide the salary by about 220 working days to get the employee's daily cost, then multiply by 1.3–1.5 to cover the benefits, holidays and risk a contractor has to fund themselves.
Should I charge a half-day rate?
Many contractors offer a half-day rate at 55–60% of the full day rate, because a half day still blocks most of the day for other work.
Does the day rate include VAT or GST?
No. Quote your rate before tax and add VAT, GST or sales tax on the invoice if you are registered.
