Advice when pitching a day rate for non-project work
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.
Ultimately, what would be presented to clients would be the final rate:
I charge a day rate of $274.40 for an 8-10 hour day. Otherwise it's
$61.74/hour. We can discuss other terms, if you'd like.
How it's calculated is not really their business.
The benefit of this type of calculation is the contractor doesn't lose billable time for a company doesn't have them working a full 40-hours. In my case, I usually end up working a full 40-hour week, but I'm trying to be a bit more structured in my freelance work. Having said that, I don't have experience with day rates and project rates. A lot of advice for freelancers is to charge by the day or project. I also think charging in this way helps companies to remember that you are a contractor, not full-time, as some companies (but not all) seem to go the freelancer route in order to avoid paying US payroll taxes.
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
asked 50 mins ago
user70848user70848
1,346524
|
show 4 more comments
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.
Ultimately, what would be presented to clients would be the final rate:
I charge a day rate of $274.40 for an 8-10 hour day. Otherwise it's
$61.74/hour. We can discuss other terms, if you'd like.
How it's calculated is not really their business.
The benefit of this type of calculation is the contractor doesn't lose billable time for a company doesn't have them working a full 40-hours. In my case, I usually end up working a full 40-hour week, but I'm trying to be a bit more structured in my freelance work. Having said that, I don't have experience with day rates and project rates. A lot of advice for freelancers is to charge by the day or project. I also think charging in this way helps companies to remember that you are a contractor, not full-time, as some companies (but not all) seem to go the freelancer route in order to avoid paying US payroll taxes.
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
asked 50 mins ago
user70848user70848
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
31 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
28 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
23 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
22 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
20 mins ago
|
show 4 more comments
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.
Ultimately, what would be presented to clients would be the final rate:
I charge a day rate of $274.40 for an 8-10 hour day. Otherwise it's
$61.74/hour. We can discuss other terms, if you'd like.
How it's calculated is not really their business.
The benefit of this type of calculation is the contractor doesn't lose billable time for a company doesn't have them working a full 40-hours. In my case, I usually end up working a full 40-hour week, but I'm trying to be a bit more structured in my freelance work. Having said that, I don't have experience with day rates and project rates. A lot of advice for freelancers is to charge by the day or project. I also think charging in this way helps companies to remember that you are a contractor, not full-time, as some companies (but not all) seem to go the freelancer route in order to avoid paying US payroll taxes.
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
asked 50 mins ago
user70848user70848
1,346524
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.
Ultimately, what would be presented to clients would be the final rate:
I charge a day rate of $274.40 for an 8-10 hour day. Otherwise it's
$61.74/hour. We can discuss other terms, if you'd like.
How it's calculated is not really their business.
The benefit of this type of calculation is the contractor doesn't lose billable time for a company doesn't have them working a full 40-hours. In my case, I usually end up working a full 40-hour week, but I'm trying to be a bit more structured in my freelance work. Having said that, I don't have experience with day rates and project rates. A lot of advice for freelancers is to charge by the day or project. I also think charging in this way helps companies to remember that you are a contractor, not full-time, as some companies (but not all) seem to go the freelancer route in order to avoid paying US payroll taxes.
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
asked 50 mins ago
user70848user70848
1,346524
asked 50 mins ago
user70848user70848
1,346524
edited 2 mins ago
user70848
asked 50 mins ago
user70848user70848
1,346524
asked 50 mins ago
user70848user70848
1,346524
asked 50 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
31 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
28 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
23 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
22 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
20 mins ago
|
show 4 more comments
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
31 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
28 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
23 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
22 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
20 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
31 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
31 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
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
28 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
23 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
23 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
22 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
22 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
20 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
20 mins ago
|
show 4 more comments
1 Answer
1
active
oldest
votes
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.
answered 5 mins ago
joeqwertyjoeqwerty
77539
add a comment |
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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.
answered 5 mins ago
joeqwertyjoeqwerty
77539
add a comment |
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.
answered 5 mins ago
joeqwertyjoeqwerty
77539
add a comment |
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.
answered 5 mins ago
joeqwertyjoeqwerty
77539
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.
answered 5 mins ago
joeqwertyjoeqwerty
77539
answered 5 mins ago
joeqwertyjoeqwerty
77539
answered 5 mins ago
joeqwertyjoeqwerty
77539
answered 5 mins ago
joeqwertyjoeqwerty
77539
77539
add a comment |
add a comment |
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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
31 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
28 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
23 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
22 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
20 mins ago