Convert an annual salary to an equivalent contractor day rate, or work backwards from a day rate to see what annual salary it represents. Accounts for holidays, sick days and employer costs.
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Setting the right day rate is one of the most important decisions a freelancer or contractor makes. Too low and you're underpaid. Too high and you lose contracts. The key is to start from what you need to earn and work backwards — not from what you think the market will accept.
As a contractor you lose benefits that employees take for granted:
A common starting point is to divide your target annual salary by the number of billable days and add 20-30% for on-costs and risk. This tool does this calculation automatically.
Once you have your minimum day rate, check market rates for your role and location. If your minimum is below market rate, great — you have room to price higher. If your minimum is above market rate, you need to either reduce your costs or position yourself as a specialist who commands a premium.
Some clients prefer a fixed project price rather than a day rate. Use our Project Pricing Calculator to convert your day rate into a project price based on estimated hours.
If your contract falls inside IR35 your effective take-home pay is significantly lower than if you are outside. This affects how you should price your day rate. Use our IR35 Status Checker to assess your position.