Advice when pitching a day rate for non-project work












-1















I read an article for contractors/freelancers about how to calculate a day rate, vs hourly rate. I typically do staff augmentation work on multiple projects, for a single client.



The calculation was to charge an extra 40% premium to get to your hourly rate, then multiply by 8. This is your day rate. The article then advised to charge 75% of your day rate as your 1/2 day rate; then to charge 30% of the 1/2 day rate as the hourly rate.



Here's an example: Let's say the hourly rate is $24.5 (or $50,000/2040). A 40% premium turns this into $34.3/hour; multiplying by 8 gives a day rate of $274.4. Via the other calculations, the 1/2 day rate is $205.8; the hourly rate is $61.74/hour.



The benefit of this type of calculation is that it's a lot more economical for a company to pay a full 8-hour day rate, vs book by the hour, because the hourly rate ends up being fairly high. In addition, as the contractor, you essentially ensure you work a full day.



Usually, I do end up working a full 40-hour week, but with this formula, there's a little more insurance. I think this is a great idea, and I'm curious if anyone has any advice for how to approach negotiations or pitch this to a potential client. Basically, when someone asks for the hourly rate, I want to steer the conversation into asking for a day rate. I suppose this means a contract on my part will be required, to detail this out.



-- Related: Freelance vs Agency Contract vs Full Time Salary






salary contractors







share|improve this question























  • I dunno, this sounds pretty complicated to me. I've never had a client ask me what my "day rate" is. I give them my hourly rate and provide discounting if and when needed based on the length of the engagement and the level of commitment from the client.

    – joeqwerty
    28 mins ago













  • Also, if you're planning on pitching this to a client you're going to need to simplify how you explain it to them. In fact, don't explain it to them at all. Calculate it on your own and present it to them as a single "package" or quote. If you try to explain this to a client the way you've explained it to us, you're probably going to turn clients off. Clients do not want to deal with a complicated pay structure or methodology. They want simple; "What's your hourly rate?"

    – joeqwerty
    25 mins ago











  • @joeqwerty I'm explaining it here, to get feedback on the overall concept. But to clients, it would be something like this: My hourly rate is $61.74; but if you are able to guarantee 8 hours per day, (up to 11), I'll knock that down to $34.30/hr.

    – user70848
    20 mins ago











  • @joeqwerty Also it's very common for some types of contractors to ask for a day rate or project rate. I'm familiar with your technique of discounting if the length of engagement is long, or depending on the project, etc. If you have another. This formula was advice for contractors so they don't charge too little. If you have another formula, please feel free to suggest it.

    – user70848
    19 mins ago













  • I don't doubt that this is used and may be useful, I'm only saying I've never encountered it before. I've never spoken to any contractor or consultant who uses this method. Everyone I know stipulates an hourly rate that is typically some multiple of a similarly salaried employee (usually 1.5.to 3 times a salaried employee).

    – joeqwerty
    17 mins ago


















-1















I read an article for contractors/freelancers about how to calculate a day rate, vs hourly rate. I typically do staff augmentation work on multiple projects, for a single client.



The calculation was to charge an extra 40% premium to get to your hourly rate, then multiply by 8. This is your day rate. The article then advised to charge 75% of your day rate as your 1/2 day rate; then to charge 30% of the 1/2 day rate as the hourly rate.



Here's an example: Let's say the hourly rate is $24.5 (or $50,000/2040). A 40% premium turns this into $34.3/hour; multiplying by 8 gives a day rate of $274.4. Via the other calculations, the 1/2 day rate is $205.8; the hourly rate is $61.74/hour.



The benefit of this type of calculation is that it's a lot more economical for a company to pay a full 8-hour day rate, vs book by the hour, because the hourly rate ends up being fairly high. In addition, as the contractor, you essentially ensure you work a full day.



Usually, I do end up working a full 40-hour week, but with this formula, there's a little more insurance. I think this is a great idea, and I'm curious if anyone has any advice for how to approach negotiations or pitch this to a potential client. Basically, when someone asks for the hourly rate, I want to steer the conversation into asking for a day rate. I suppose this means a contract on my part will be required, to detail this out.



-- Related: Freelance vs Agency Contract vs Full Time Salary






salary contractors







share|improve this question























  • I dunno, this sounds pretty complicated to me. I've never had a client ask me what my "day rate" is. I give them my hourly rate and provide discounting if and when needed based on the length of the engagement and the level of commitment from the client.

    – joeqwerty
    28 mins ago













  • Also, if you're planning on pitching this to a client you're going to need to simplify how you explain it to them. In fact, don't explain it to them at all. Calculate it on your own and present it to them as a single "package" or quote. If you try to explain this to a client the way you've explained it to us, you're probably going to turn clients off. Clients do not want to deal with a complicated pay structure or methodology. They want simple; "What's your hourly rate?"

    – joeqwerty
    25 mins ago











  • @joeqwerty I'm explaining it here, to get feedback on the overall concept. But to clients, it would be something like this: My hourly rate is $61.74; but if you are able to guarantee 8 hours per day, (up to 11), I'll knock that down to $34.30/hr.

    – user70848
    20 mins ago











  • @joeqwerty Also it's very common for some types of contractors to ask for a day rate or project rate. I'm familiar with your technique of discounting if the length of engagement is long, or depending on the project, etc. If you have another. This formula was advice for contractors so they don't charge too little. If you have another formula, please feel free to suggest it.

    – user70848
    19 mins ago













  • I don't doubt that this is used and may be useful, I'm only saying I've never encountered it before. I've never spoken to any contractor or consultant who uses this method. Everyone I know stipulates an hourly rate that is typically some multiple of a similarly salaried employee (usually 1.5.to 3 times a salaried employee).

    – joeqwerty
    17 mins ago
















-1












-1








-1








I read an article for contractors/freelancers about how to calculate a day rate, vs hourly rate. I typically do staff augmentation work on multiple projects, for a single client.



The calculation was to charge an extra 40% premium to get to your hourly rate, then multiply by 8. This is your day rate. The article then advised to charge 75% of your day rate as your 1/2 day rate; then to charge 30% of the 1/2 day rate as the hourly rate.



Here's an example: Let's say the hourly rate is $24.5 (or $50,000/2040). A 40% premium turns this into $34.3/hour; multiplying by 8 gives a day rate of $274.4. Via the other calculations, the 1/2 day rate is $205.8; the hourly rate is $61.74/hour.



The benefit of this type of calculation is that it's a lot more economical for a company to pay a full 8-hour day rate, vs book by the hour, because the hourly rate ends up being fairly high. In addition, as the contractor, you essentially ensure you work a full day.



Usually, I do end up working a full 40-hour week, but with this formula, there's a little more insurance. I think this is a great idea, and I'm curious if anyone has any advice for how to approach negotiations or pitch this to a potential client. Basically, when someone asks for the hourly rate, I want to steer the conversation into asking for a day rate. I suppose this means a contract on my part will be required, to detail this out.



-- Related: Freelance vs Agency Contract vs Full Time Salary






salary contractors







share|improve this question














I read an article for contractors/freelancers about how to calculate a day rate, vs hourly rate. I typically do staff augmentation work on multiple projects, for a single client.



The calculation was to charge an extra 40% premium to get to your hourly rate, then multiply by 8. This is your day rate. The article then advised to charge 75% of your day rate as your 1/2 day rate; then to charge 30% of the 1/2 day rate as the hourly rate.



Here's an example: Let's say the hourly rate is $24.5 (or $50,000/2040). A 40% premium turns this into $34.3/hour; multiplying by 8 gives a day rate of $274.4. Via the other calculations, the 1/2 day rate is $205.8; the hourly rate is $61.74/hour.



The benefit of this type of calculation is that it's a lot more economical for a company to pay a full 8-hour day rate, vs book by the hour, because the hourly rate ends up being fairly high. In addition, as the contractor, you essentially ensure you work a full day.



Usually, I do end up working a full 40-hour week, but with this formula, there's a little more insurance. I think this is a great idea, and I'm curious if anyone has any advice for how to approach negotiations or pitch this to a potential client. Basically, when someone asks for the hourly rate, I want to steer the conversation into asking for a day rate. I suppose this means a contract on my part will be required, to detail this out.



-- Related: Freelance vs Agency Contract vs Full Time Salary






salary contractors




salary contractors






share|improve this question













share|improve this question











share|improve this question




share|improve this question










asked 47 mins ago









user70848user70848

1,346524




1,346524













  • I dunno, this sounds pretty complicated to me. I've never had a client ask me what my "day rate" is. I give them my hourly rate and provide discounting if and when needed based on the length of the engagement and the level of commitment from the client.

    – joeqwerty
    28 mins ago













  • Also, if you're planning on pitching this to a client you're going to need to simplify how you explain it to them. In fact, don't explain it to them at all. Calculate it on your own and present it to them as a single "package" or quote. If you try to explain this to a client the way you've explained it to us, you're probably going to turn clients off. Clients do not want to deal with a complicated pay structure or methodology. They want simple; "What's your hourly rate?"

    – joeqwerty
    25 mins ago











  • @joeqwerty I'm explaining it here, to get feedback on the overall concept. But to clients, it would be something like this: My hourly rate is $61.74; but if you are able to guarantee 8 hours per day, (up to 11), I'll knock that down to $34.30/hr.

    – user70848
    20 mins ago











  • @joeqwerty Also it's very common for some types of contractors to ask for a day rate or project rate. I'm familiar with your technique of discounting if the length of engagement is long, or depending on the project, etc. If you have another. This formula was advice for contractors so they don't charge too little. If you have another formula, please feel free to suggest it.

    – user70848
    19 mins ago













  • I don't doubt that this is used and may be useful, I'm only saying I've never encountered it before. I've never spoken to any contractor or consultant who uses this method. Everyone I know stipulates an hourly rate that is typically some multiple of a similarly salaried employee (usually 1.5.to 3 times a salaried employee).

    – joeqwerty
    17 mins ago





















  • I dunno, this sounds pretty complicated to me. I've never had a client ask me what my "day rate" is. I give them my hourly rate and provide discounting if and when needed based on the length of the engagement and the level of commitment from the client.

    – joeqwerty
    28 mins ago













  • Also, if you're planning on pitching this to a client you're going to need to simplify how you explain it to them. In fact, don't explain it to them at all. Calculate it on your own and present it to them as a single "package" or quote. If you try to explain this to a client the way you've explained it to us, you're probably going to turn clients off. Clients do not want to deal with a complicated pay structure or methodology. They want simple; "What's your hourly rate?"

    – joeqwerty
    25 mins ago











  • @joeqwerty I'm explaining it here, to get feedback on the overall concept. But to clients, it would be something like this: My hourly rate is $61.74; but if you are able to guarantee 8 hours per day, (up to 11), I'll knock that down to $34.30/hr.

    – user70848
    20 mins ago











  • @joeqwerty Also it's very common for some types of contractors to ask for a day rate or project rate. I'm familiar with your technique of discounting if the length of engagement is long, or depending on the project, etc. If you have another. This formula was advice for contractors so they don't charge too little. If you have another formula, please feel free to suggest it.

    – user70848
    19 mins ago













  • I don't doubt that this is used and may be useful, I'm only saying I've never encountered it before. I've never spoken to any contractor or consultant who uses this method. Everyone I know stipulates an hourly rate that is typically some multiple of a similarly salaried employee (usually 1.5.to 3 times a salaried employee).

    – joeqwerty
    17 mins ago



















I dunno, this sounds pretty complicated to me. I've never had a client ask me what my "day rate" is. I give them my hourly rate and provide discounting if and when needed based on the length of the engagement and the level of commitment from the client.

– joeqwerty
28 mins ago







I dunno, this sounds pretty complicated to me. I've never had a client ask me what my "day rate" is. I give them my hourly rate and provide discounting if and when needed based on the length of the engagement and the level of commitment from the client.

– joeqwerty
28 mins ago















Also, if you're planning on pitching this to a client you're going to need to simplify how you explain it to them. In fact, don't explain it to them at all. Calculate it on your own and present it to them as a single "package" or quote. If you try to explain this to a client the way you've explained it to us, you're probably going to turn clients off. Clients do not want to deal with a complicated pay structure or methodology. They want simple; "What's your hourly rate?"

– joeqwerty
25 mins ago





Also, if you're planning on pitching this to a client you're going to need to simplify how you explain it to them. In fact, don't explain it to them at all. Calculate it on your own and present it to them as a single "package" or quote. If you try to explain this to a client the way you've explained it to us, you're probably going to turn clients off. Clients do not want to deal with a complicated pay structure or methodology. They want simple; "What's your hourly rate?"

– joeqwerty
25 mins ago













@joeqwerty I'm explaining it here, to get feedback on the overall concept. But to clients, it would be something like this: My hourly rate is $61.74; but if you are able to guarantee 8 hours per day, (up to 11), I'll knock that down to $34.30/hr.

– user70848
20 mins ago





@joeqwerty I'm explaining it here, to get feedback on the overall concept. But to clients, it would be something like this: My hourly rate is $61.74; but if you are able to guarantee 8 hours per day, (up to 11), I'll knock that down to $34.30/hr.

– user70848
20 mins ago













@joeqwerty Also it's very common for some types of contractors to ask for a day rate or project rate. I'm familiar with your technique of discounting if the length of engagement is long, or depending on the project, etc. If you have another. This formula was advice for contractors so they don't charge too little. If you have another formula, please feel free to suggest it.

– user70848
19 mins ago







@joeqwerty Also it's very common for some types of contractors to ask for a day rate or project rate. I'm familiar with your technique of discounting if the length of engagement is long, or depending on the project, etc. If you have another. This formula was advice for contractors so they don't charge too little. If you have another formula, please feel free to suggest it.

– user70848
19 mins ago















I don't doubt that this is used and may be useful, I'm only saying I've never encountered it before. I've never spoken to any contractor or consultant who uses this method. Everyone I know stipulates an hourly rate that is typically some multiple of a similarly salaried employee (usually 1.5.to 3 times a salaried employee).

– joeqwerty
17 mins ago







I don't doubt that this is used and may be useful, I'm only saying I've never encountered it before. I've never spoken to any contractor or consultant who uses this method. Everyone I know stipulates an hourly rate that is typically some multiple of a similarly salaried employee (usually 1.5.to 3 times a salaried employee).

– joeqwerty
17 mins ago












1 Answer
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oldest

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This is somewhat confusing. I've never heard of this methodology before. That doesn't mean that it isn't valid or that it isn't used, just that I've never heard of nor seen it in practice before.



From my own contracting/consulting experience, clients don't like complicated payment structures. They want simple; "My hourly rate is $xx.xx per hour". I'll work on an hourly "ad-hoc" basis for short term projects and tasks and I'll also sell block hour contracts for clients that have longer term needs.



If a client wants me for a short term project or task then I present them my full hourly rate. If they want to use me longer term then I'll offer them a discount on my hourly rate in return for committing to a larger block hour contract.





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    This is somewhat confusing. I've never heard of this methodology before. That doesn't mean that it isn't valid or that it isn't used, just that I've never heard of nor seen it in practice before.



    From my own contracting/consulting experience, clients don't like complicated payment structures. They want simple; "My hourly rate is $xx.xx per hour". I'll work on an hourly "ad-hoc" basis for short term projects and tasks and I'll also sell block hour contracts for clients that have longer term needs.



    If a client wants me for a short term project or task then I present them my full hourly rate. If they want to use me longer term then I'll offer them a discount on my hourly rate in return for committing to a larger block hour contract.





    share




























      0














      This is somewhat confusing. I've never heard of this methodology before. That doesn't mean that it isn't valid or that it isn't used, just that I've never heard of nor seen it in practice before.



      From my own contracting/consulting experience, clients don't like complicated payment structures. They want simple; "My hourly rate is $xx.xx per hour". I'll work on an hourly "ad-hoc" basis for short term projects and tasks and I'll also sell block hour contracts for clients that have longer term needs.



      If a client wants me for a short term project or task then I present them my full hourly rate. If they want to use me longer term then I'll offer them a discount on my hourly rate in return for committing to a larger block hour contract.





      share


























        0












        0








        0







        This is somewhat confusing. I've never heard of this methodology before. That doesn't mean that it isn't valid or that it isn't used, just that I've never heard of nor seen it in practice before.



        From my own contracting/consulting experience, clients don't like complicated payment structures. They want simple; "My hourly rate is $xx.xx per hour". I'll work on an hourly "ad-hoc" basis for short term projects and tasks and I'll also sell block hour contracts for clients that have longer term needs.



        If a client wants me for a short term project or task then I present them my full hourly rate. If they want to use me longer term then I'll offer them a discount on my hourly rate in return for committing to a larger block hour contract.





        share













        This is somewhat confusing. I've never heard of this methodology before. That doesn't mean that it isn't valid or that it isn't used, just that I've never heard of nor seen it in practice before.



        From my own contracting/consulting experience, clients don't like complicated payment structures. They want simple; "My hourly rate is $xx.xx per hour". I'll work on an hourly "ad-hoc" basis for short term projects and tasks and I'll also sell block hour contracts for clients that have longer term needs.



        If a client wants me for a short term project or task then I present them my full hourly rate. If they want to use me longer term then I'll offer them a discount on my hourly rate in return for committing to a larger block hour contract.






        share











        share


        share










        answered 2 mins ago









        joeqwertyjoeqwerty

        77539




        77539






























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