The arithmetic, and the number that decides it
Day rate equals hourly rate times billable hours in the day. At 150 dollars an hour and 7 billable hours, that is 1,050 dollars. The multiplier is the only real decision, and the honest one is measured rather than assumed. Yale Law School's published worked example shows ten hours at the desk producing 7.5 billable, once lunch, two short breaks, reading and correspondence, and meetings are removed. Multiply by 8 when your day genuinely yields 6 or 7 and you have quietly cut your effective rate, because the client still gets the whole day. The arithmetic is the same in any currency; only the symbol changes.
What a day rate has to absorb
An employee's hourly cost to an employer is not their take-home pay, and an independent rate carries the same loading. Non-billable work is the largest piece: proposals, invoicing, admin, learning, and the time between engagements. On top sit the costs an employer would otherwise carry, which vary sharply by country. In the US, the Internal Revenue Service sets self-employment tax at 15.3 percent, made up of 12.4 percent for Social Security and 2.9 percent for Medicare, and it is owed once net earnings from self-employment reach 400 dollars. Rules and rates differ everywhere else. This is background, not tax advice; your own revenue authority or an accountant is where a specific figure comes from.
| Hourly rate | Billable hours in the day | Day rate | Effective rate over a 10-hour day |
|---|---|---|---|
| 50 | 6 | 300 | 30.00 |
| 75 | 6 | 450 | 45.00 |
| 100 | 6 | 600 | 60.00 |
| 100 | 8 | 800 | 80.00 |
| 125 | 7 | 875 | 87.50 |
| 150 | 7 | 1,050 | 105.00 |
| 200 | 8 | 1,600 | 160.00 |
Working back from a year
The other direction is often more revealing. Start from working weeks rather than calendar weeks: 52 less three weeks of vacation and two of public holidays leaves 47, or 235 working days. No consultant bills all of them, because the unbilled half of the job has to happen somewhere, so the billable-day count is lower and is a fact about your practice rather than a number you get to pick. Divide a target annual revenue by your measured billable days, not by 235, and the day rate that comes out is one you can actually hold for a year. Using the higher denominator is the most common way a rate ends up structurally too low.
Day rate or hourly rate?
A day rate suits work that arrives in whole-day blocks, workshops, on-site engagements, sprints, where switching in and out is what destroys the value. An hourly rate suits work that arrives in fragments, reviews, advice, short interventions, where a day rate would either overcharge for twenty minutes or undercharge for nine hours. Many practices run both and convert between them with a stated multiplier so the two never contradict each other. Whichever you use, the check is the same: divide what you were paid by the hours the engagement actually consumed, including the unbilled preparation and follow-up, and see what rate you really got.
In short
- Day rate equals hourly rate times billable hours in a day, and the multiplier is the whole decision.
- Measure your billable hours per day before choosing the multiplier; a published example shows ten hours at work yielding 7.5 billable.
- A rate has to absorb non-billable work and the employer-side costs you now carry. In the US that includes 15.3 percent self-employment tax; rules differ elsewhere.
- Divide target revenue by measured billable days, not by all 235 working days in a 47-week year.
- Day rates fit whole-day blocks; hourly fits fragments. Check the real rate afterward either way.
Related guides
- Working Hours in a Year: A 365-day year holds 8,760 hours.
- What Are Billable Hours?: Billable hours are the hours a client is charged for, recorded against a specific matter or project and usually logged in tenths of an hour.
- Time Tracking for Freelancers: Freelancers track time for three separate reasons: to bill accurately, to support the records their tax authority expects, and to find out where the unpaid half of the week goes.