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A day rate is the amount of gross income you make per day based on a contract or salary. It is an important figure to calculate if you are considering switching jobs, writing a salary history or calculating a proposal. In order to calculate your day rate, you will need to gather your tax, salary or contract documents. You can figure out your day rate manually with a calendar and a calculator. You can compare these daily rates to other jobs or average daily rates in your field. This article will tell you how to work out your day rate.
Steps
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Gather the financial documents that detail the money you have made on a particular job. This can include your pay stubs, tax documents and/or signed contracts.
Calculate the total amount paid for the work you did. Remember to include commission, if that is part of your yearly salary. Generally, a day rate is calculated according to the gross income, and it does not factor in taxes, 401 K contributions or medical savings accounts.- Taxes vary from state to state and country to country. If you are attempting to figure out how your daily rate competes against a national or state average, it is especially important to work with gross salary rates.
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Figure out the number of days you worked on the job. For a standard, 5-day, work week and salaried job, you would multiply 5 times 52, the number of weeks in the year. Modify the result, 260, based on any un-paid work days.
Divide your contract or salary total by the number of days you worked. For example, if you received $45,000 and worked 260 days, your day rate would be $173 per day.- Imagine you are working as a freelancer and you were paid $7,000 for a project that lasted 3 months. If you worked 5 days per week, you would multiply 5 times 12 (weeks) to get 60 total working days. Divide $7,000 by 60 to get your $116.67 day rate.
Repeat this process with other positions you have held to get a good idea of your salary history.
Community Q&A
- QuestionDo I have to set myself up as a limited company to be a day rate contractor?
Community AnswerNot necessarily. It depends how you want to conduct your tax affairs and the requirements of those who hire you. In the UK (and many other EU countries) you could do this as a sole trader, which is simplest. In the US, the equivalent is sole proprietor.
Tips
- You can also go online to try to work out your daily or hourly rate. Some sites, such as nyc.gov/site/opa/my-pay/pay-rate-calculator.page and us.thesalarycalculator.co.uk/hourly.php provide a pay rate calculator.Thanks
- If you already know your hourly pay rate, then multiply it by the hours you work per day to find out your day rate.Thanks
- If you need to calculate day rates for a proposal, then you should begin by calculating your costs, researching average salaries for the work you are doing and taking into account your salary history. Freelanceswitch.com/rates can help you to calculate your hourly and daily rate.Thanks
Things You'll Need
- Payment slips
- Calculator
- Tax documents
- Calendar
- Daily rate calculator (optional)
References
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