Day rate calculator

Freelance and contractor day rate calculator

Turn the salary you would earn as an employee into the day rate that gives you the same income as a contractor, after paying for holiday, sickness, equipment, benefits and unbillable admin days.

✓ Salary to day rate
✓ Benefits & costs
✓ Days off & admin
✓ Reverse: rate to income

Your numbers

Comparable salary (per year)

Currency

Benefits to replace

%

Business expenses (per year)

Working days in a year

Days off (holiday, sick…)

Admin, sales and gaps

%

Share of the remaining days you cannot bill.

Test a day rateSee the yearly income this rate would produce.

Result

Day rate needed

–

Create an invoice →

A planning estimate, not tax advice. Rates are before tax and VAT or sales tax.

How to convert a salary to a day rate

Enter the salary you want to match. Use the annual salary of a comparable permanent job, before tax.
Add employee benefits you will now fund yourself. Pension, health cover, paid leave and training are worth roughly 10% to 30% of salary. Enter a percentage.
Add business costs. Include insurance, accounting, equipment, software and travel that you pay each year.
Set the working days. Enter working days in the year, days off and the share of days that go on admin, sales or gaps.
Read the day rate, and test other rates. See the day rate needed, then enter any rate to see the income it would produce.

Why a contractor’s day rate is higher than a salary ÷ 260

Dividing a salary by the number of working days (around 260 in a year) gives a figure that is far too low for a freelancer. The employee’s salary hides several costs that the contractor must now fund. In addition, a freelancer is only paid for days actually worked.

No paid leave. Holidays, public holidays and sick days earn nothing.
No employer benefits. Pension contributions, health insurance and training come out of the rate.
Business costs. Equipment, software, insurance, accounting and travel.
Unbilled days. Finding work, invoicing, learning and gaps between contracts.

The formula the calculator uses is:

day rate = (salary × (1 + benefits %) + expenses) ÷ billable days, where billable days = (working days − days off) × (1 − admin share).

Worked example

Item	Value
Comparable salary	60,000
Benefits to replace (20%)	12,000
Business expenses	5,000
Cost base	60,000 × 1.20 + 5,000 = 77,000
Working days	260
Days off (holiday, public holidays, sickness)	40
Admin and gaps (15%)	(260 − 40) × 15% = 33 days
Billable days	220 × 0.85 = 187
Day rate	77,000 ÷ 187 = 411.76

So a 60,000 salary equates to about a 412 day rate, nearly twice 60,000 ÷ 260 = 231. That is a typical result and not a sign that contractors are overpaid: the gap pays for the costs and risks above. Contractors also carry the risk of gaps between contracts, which is why many aim for a margin on top.

Cost-based rate versus market rate

The calculator gives a cost-based floor. Market day rates depend on the sector, skills, location, seniority and how in-demand you are. Compare your figure with recent job postings, recruiter rate guides or contacts in the same field, then set your rate where your value and the market meet. Never copy someone else’s rate card, as their costs and goals are not yours.

Ways to adjust

Increase the rate for short contracts or rush projects.
Offer a small discount for long commitments or prepayment.
Review the rate each year for inflation and experience.
Agree what a “day” means: 7, 7.5 or 8 hours, and what happens to travel and overtime.

Tax and status

The rate here is before tax, and before sales tax, VAT or GST. If you operate through a limited company, you will pay corporation tax and pay yourself in salary and dividends; as a sole trader, you pay personal income tax and social contributions. In some countries, tax authorities check if a contractor is really an employee: in the UK this involves IR35 rules, in the US the worker classification tests, and in Australia the personal services income rules. Read the official guidance for your country. The calculator does not give tax or legal advice.

When you invoice a day rate, show the number of days, the rate and the total. Use the invoice generator with quantity as days and unit price as the day rate.

Glossary

Day rate: A fixed fee for a working day, agreed in a contract.
Billable days: Days in a year that can be charged to a client.
Utilisation: The share of available days that are billable.
Cost base: Salary equivalent plus benefits and business expenses the rate has to cover.
IR35: UK rules for deciding whether a contractor working through a company is effectively an employee for tax.

Check official guidance. We could not fully confirm these points against an official page when we last reviewed, so please verify them before relying on them:

Status rules for contractors (IR35, worker classification, personal services income) are complex and change. Check official guidance or ask an adviser.

Frequently asked questions

How do I convert a salary to a day rate?

Add the value of benefits and your business costs to the salary, then divide by the number of days you can actually bill in a year, after holidays, sickness and admin days.

How many billable days are there in a year?

There are about 260 weekdays. After holiday, public holidays, sick days and admin or gaps between contracts, many freelancers bill between 180 and 220.

What benefits should I include?

Employers typically provide pension contributions, paid leave, sick pay, health insurance and training. Together they are often worth 10% to 30% of salary. Use the percentage that matches the job you are comparing.

Is a day rate before or after tax?

Before tax. It is the amount you invoice. Income tax, social contributions and sales tax or VAT are separate.

What is a typical contractor day rate?

It depends hugely on the field, location and seniority. Use job boards, recruiter surveys and peers rather than a single figure, and use the calculator to check your cost floor.

How long is a working day?

Agree it in the contract. It is commonly 7.5 or 8 hours, but there is no universal definition. State it and say how overtime or part-days are charged.

Should I charge for travel time?

It is common to charge travel expenses, and sometimes travel time at a reduced rate. Put your policy in the contract and on the invoice.

What if I work through a limited company?

The calculator is still a floor. Company costs, corporation tax and how you pay yourself change your take-home, so ask an accountant.

How do I invoice a day rate?

Use quantity in days and the unit price as the rate, and include the dates worked in the description. The timesheet invoice generator can make this easier.

Is my data stored?

Only in your browser, so a refresh keeps your numbers. Nothing is uploaded, and you can reset it any time.