Proposals · Glossary
What is a day rate?
A day rate is the price a freelancer, contractor or consultant charges for one working day, usually defined as a set number of hours such as seven or eight. It is built from the income the person needs, the costs of running the business and the number of days in a year they can realistically bill.
A day rate looks like an hourly rate multiplied by eight, and that is the most common way to get it wrong. The days that cannot be billed decide the number more than the hours that can.
Indunil Asanka · Co-founder
4 min read · Published
| Step | Amount | Note |
|---|---|---|
| Target personal income | $120,000 | What the business needs to pay its owner |
| Business costs for the year | $18,000 | Insurance, software, equipment, accounting, super top ups |
| Total to recover | $138,000 | Income plus costs |
| Working days in the year | 220 | 260 weekdays less about 10 public holidays, 20 days of leave and 10 sick or training days |
| Days actually billed | 154 | 70 percent of working days; the rest go on sales, admin and gaps |
| Day rate | $896, rounded to $900 | $138,000 divided by 154 billable days |
What the rate is made of
A day rate has to pay for the days that do not earn. An employee is paid for public holidays, leave and the hours spent on email; a contractor is not, so those days are built into the price of the days that are billed. The table shows the usual working: decide what the business must earn, add its costs, then divide by the billable days, not the calendar ones. Fair Work lists the national and state public holidays, which alone remove around ten weekdays a year depending on the state.
Why the billable share matters most
In the worked example, changing the billable share from 70 to 60 percent of working days drops billed days from 154 to 132 and pushes the rate from $896 to about $1,045. No other input moves the number as much. Early in a freelance career the share is often lower than people expect, because finding work, quoting and invoicing all take days. Track it for a quarter before trusting it.
Day rate or hourly rate
Quoting by the day suits work that fills days, such as workshops, site visits, analysis and on site contracting, because it stops clients counting minutes and rewards getting things done. Hourly rates suit short, interrupted work such as support calls. Define the day in the proposal, for example 7.5 hours between 8 am and 6 pm, and say how part days and overtime are charged, so both sides read the rate the same way.
Contractor or employee
Charging a day rate does not make someone a contractor. In Australia the ATO looks at the whole relationship, such as whether the worker controls how the work is done and carries business risk, and in the UK the off payroll working rules, known as IR35, ask similar questions. A long engagement at a day rate for one client, working like staff, can be treated as employment. Get advice before relying on the label.
Where it shows up in the product
In the proposals module a day rate becomes a pricing table line with day as the unit label, and quantity accepts up to three decimals, so half a day is 0.5. The structured brief takes price hints, deliverables, currency, a deposit percent and validity days, and price hints are authoritative, so a day rate you give becomes a line at exactly that price. The consulting engagement template is a starting point for this kind of proposal.
Questions people ask
How many hours is a day rate?
There is no legal standard. Seven, 7.5 and 8 hours are the common definitions, and some contractors define a day by outcome rather than hours. What matters is that the proposal states it, along with what happens if a day runs long, so a client cannot later argue that a day meant ten hours.
Should a day rate include GST?
In Australia a GST registered contractor charges GST on top of the day rate for most business clients. Quote business clients ex GST with a clear note and show GST on the invoice. Consumers expect GST inclusive prices, so a rate quoted to individuals should include it.
How do I charge for half days?
Many freelancers set a half day rate at slightly more than half the full rate, because a half day booking often prevents other work that day. Others simply charge 0.5 of a day. Either is fine if it is written in the proposal before the work, along with the minimum booking you accept.
Should travel time be charged on a day rate?
State a rule in the proposal. Common approaches are travel included within the metro area, travel charged at a reduced rate beyond it, or travel days billed as full days when the trip takes the whole day. Clients rarely object to a stated rule; they object to discovering travel on an invoice.
How often should a day rate be increased?
Review it at least once a year against your costs, your billable share and the market. Give existing clients notice in writing, often 30 to 60 days, and apply the new rate to new proposals immediately. Rates that never move quietly cut your income every year inflation rises.
Should a day rate be quoted differently for long engagements?
Many contractors offer a lower day rate for a long, guaranteed booking, because it removes the unbilled days spent finding the next job. If you do, tie the discount to a minimum number of days in writing, so a client cannot book three days at the rate meant for sixty.
Make one with proposals
The button opens the generator with this use case already described. Change the wording to match your own.
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Step by step in the builder: Create a quote with AI, then Add a pricing table with optional extras.
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