Contractors in the UK, Europe and much of tech are quoted day rates, while employees and many clients think in hourly or annual terms. Converting between them is simple, but only if you use realistic billable days, not 52 weeks of work.
How it works
Hourly rate = day rate ÷ hours per day. Most contracts assume a 7.5 or 8 hour day, so check which one yours uses.
Annual income = day rate × billable days per week × billable weeks per year. Take out holidays, public holidays, sick days and the gaps between contracts; 44 to 46 billable weeks is a common planning figure.
Working back from an annual target, divide it by billable days to get the day rate you need.
A worked example
A $500 day rate over an 8-hour day is $62.50 an hour. Billing 5 days a week for 46 weeks gives 230 billable days, so annual income is 230 × $500 = $115,000.
Questions people ask
How do I compare a day rate with a salary?
Annual contractor income is not the same as an equal salary. Contractors pay for their own holidays, pension, equipment and often insurance. Use the Contractor vs Employee Cost Calculator for a like-for-like comparison.
How many billable days should I assume?
Around 220 to 230 is common for contractors with steady work. If you have gaps between contracts, use fewer; a planning figure that is too high overstates your income.
Should I quote hourly or daily?
Day rates reward you for efficiency and reduce time-tracking disputes. Hourly rates suit work that is unpredictable or split into small pieces.
Guides
- How Many Billable Days Are There in a Year?Not 260. After holidays, public holidays, sick days and gaps between contracts, most contractors bill 220 to 230 days. Here's why it matters for your rate.
- The True Cost of an Employee vs a ContractorAn employee usually costs 1.2 to 1.5 times their salary. Here's how to compare that fairly with a contractor's hourly rate, and find the break-even rate.
- Hourly, Day Rate or Retainer: Which Should Freelancers Charge?The same hourly rate can be packaged as a day rate, a project price or a monthly retainer. Each suits different work and moves risk in a different direction.