Hourly Rate vs Daily Rate: Contractor Rates Explained

Hourly Rate vs Daily Rate for Contractors


In the world of contracting, one of the biggest considerations for contractors is whether they will charge hourly or daily rates for their services.

There’s no right or wrong way for contractors to charge for their time and both options naturally have their own pros and cons. For some contractors, it makes more sense to charge an hourly rate, for others a daily rate is the best option, meaning it’s important for contractors to do their research to find out what works best for them.

In this guide, Umbrella Supermarket look at the difference between hourly vs daily rates for contractors, explaining the pros and cons of each option to help every contractor charge their contractor fees in a way that works best for them.

Hourly rate vs daily rate

Let’s start by looking at the options available to contractors when it comes to charging for their time.

Generally, there are two ways a contractor can charge for their time:

  • Hourly rate: this is when the contractor charges per hour worked
  • Daily rate: here the contractor will charge a set amount per day


However, there is also a third option, charging a fixed price. With this option the contractor will charge a fixed price for carrying out the project. This option can work for some contractors, however others find it difficult to accurately predict how much time a project will take and therefore how much to charge.

Determine your contractor rates

The first step to deciding whether you will charge hourly or daily rates is to first establish your contractor rates. This will help you decide whether it is feasible to charge by the day or whether it would be best to stick to an hourly rate.

Every contractor’s rates will vary depending on industry, experience and skill level. There’s no one size fits all when it comes to contractor rates. Instead, you will need to carry out research to determine how much you should be charging.

Look at permanent salary points for the same roles. Many contractor roles will have permanent counterparts and finding out what the salaries are for these roles can help you figure out how much you can charge. Remember, being hired for their short-term skills sets contractors can usually charge more than their permanent equivalents and will also need to factor in tax, national insurance and pension contributions.

Weigh up the pros and cons of an hourly rate vs daily rate 

Once you’ve determined your contractor rates it should be clear whether a daily rate or an hourly rate is the better option. Generally, contractors with higher rates of around £400 per day or £50 per hour will charge a daily rate as charging by the hour would mean less money earnt.

However, this isn’t always the case and every contractor should weigh up the pros and cons of each option to make the best decision for them.

Daily rate pros

As we’ve mentioned, with this option a contractor is paid for the number of days worked. Usually this is the opted for route by those that charge a higher fee of around and upwards of £400 per day.

The pros of a daily rate include:

  • Usually the contractor can charge higher fees than if they were charging by the hour
  • Many clients like this option as it gives them a good grasp over their budget and projected costs
  • Clients can also prefer this option as it means that if they need to ask the contractor to work extra time this won’t cost them more


Daily rate cons

The cons of charging a daily rate include:

  • As we have already touched on, some clients can take advantage of the contractor charging a daily rate, asking them to work longer hours since they will pay no more for this time. This is worth considering for contractors who do not want to work lots of overtime.

Hourly rate pros 

Charging an hourly rate is the most common route taken by contractors and usually done by those charging around and up to £40 per hour.

With this option the pros include:

  • This option can prevent the client expecting the contractor to work longer hours as with an hourly rate this will lead to extra costs for the client. In this case, if the contractor does need to work extra hours to meet deadlines they will need to seek approval from a manager who will sign this off


Hourly rate cons

The cons of charging an hourly rate include:

  • For clients, this can be the more risky option as if extra work is needed, this will lead to unaccounted for additional costs. To prevent this from happening, many clients will place a cap on the number of hours the contractor can work and requires the client to gain approval if they need to work extra hours.


What’s the best option for you? Deciding between a daily rate vs hourly rate 

Taking into account your contractor rates and weighing up the pros and cons of each option, contractors can make an informed decision on whether they will charge a daily rate or hourly rate. It’s important to remember that this decision will also be influenced by the client who may prefer one option over the other.

Once you’ve chosen how you will charge for your time, use Umbrella Supermarket’s umbrella calculator to find the perfect umbrella company for you.

Use Umbrella Supermarket’s umbrella calculator to find the best umbrella company


Having decided on the best rate structure for your contracting needs, Umbrella Supermarket can help you find the best umbrella company to work with.

Our award-winning Umbrella Company Comparison tool makes it quick and easy for contractors to find the best umbrella company in just 2 minutes. Our umbrella calculator allows contractors to find their perfect match based on their personal contractor preferences, whether that’s compliance or service level.

We show contractors how much they will take home based on their current rates and chosen provides and will even give you a payslip to show you a breakdown of your pay. Try it out and find your perfect umbrella company today.

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