Contractor rates: Should you be charging hourly or daily rates?

Hourly rates vs Daily rates?

To help you make a well-informed decision, Umbrella Supermarket has put together this guide outlining the key differences between hourly rates vs daily and the pros and cons of each, so you can choose the best route forward.

Hourly vs Daily rates: What is the difference?

When charging the client for their time, contractors can either charge by the hour or by the day.

With an hourly rate, the contractor is paid for each hour worked, whilst with a daily rate, the contractor will charge a set amount per day.

There is also a third option - charging a fixed price. Here, the contractor will charge a fixed price for carrying out the entirety of the work. Although this can work for some, generally many contractors find it difficult to accurately predict how much time a project will take and therefore how much they should charge.

What are your contractor rates?

The first step to deciding whether you will charge hourly or daily rates is to decide on how much you will charge for your time and services.

If you are a seasoned contractor, you may already know how much to charge for your time. If you are new to contracting, however, you will need to work this out.

There’s no one size fits all when it comes to contractor rates. They will vary from industry to industry and depend on the skill and experience of the contractor in question.

However, to gain a good grasp of how much you can charge, you should carry out your research.

Firstly, have a look at what other contractors in your industry are charging, this will give you a good idea of rates in your sector. It can also be useful to look at permanent salary points in your industry. Many contractor roles have permanent role equivalents, so finding out the salaries for these roles can help you work out how much you can charge.

However, it’s important to remember that contractors are hired for their short-term, specialist skill sets meaning they can usually charge more than their permanent employee counterparts and will also need to account for tax, national insurance and pension contributions in their rate.

Hourly vs Daily rate: Pros and cons

Once you’ve done your research and decided on a suitable contractor rate, it can often become clear whether it would be better for you to charge by the hour or day. After all, contractors that are charging higher rates of around £400 per day, or £50 per hour, will usually charge by the day as charging by the hour would mean less money earnt.

However, it isn’t always as clear cut as this, meaning every contractor should look at the pros and cons of both options to make a well-informed decision.

Daily rate: Pros and cons

With a daily rate, contractors are paid by the number of days worked. This is usually best for those that charge a higher fee of around or upwards of £400 per day.

The advantages of charging a daily rate include:

  • With a daily rate, contractors can often charge higher fees than if they were charging by the hour
  • Many clients favour daily rates as they offer them a clear overview of their budget and predicted costs
  • For clients, this option can also work well if they need to ask the contractor to work extra time as it won’t cost them more


However, like with most things, there are also drawbacks to this route including:

  • As we have already mentioned, some clients prefer this route as they can ask the contractor to work extra hours without paying more. So, for contractors that don’t wish to work lots of overtime, this may not be the best option.


Hourly rate: Pros and cons

On the other hand, when it comes to an hourly rate contractors are paid by the number of hours worked. This is usually best for those that charge around or up to £40 per hour.

The advantages of charging by the hour include:

  • It can stop clients expecting contractors to work lots of overtime as this will lead to increased costs on their behalf. Usually, in the case that the contractor does need to work extra, they will therefore need to seek approval from a manager to sign this off.


The drawbacks of charging an hourly rate include:

  • For the client, this can be considered a riskier route. After all, if extra work is required by the contractor, they will have to fork out for additional, unaccounted for costs. For this reason, many clients put a cap on the number of hours the contractor can work and requires them to seek approval if they do need to work more.


Now you know the pros and cons of charging by the day or hour, you can make a decision that’s right for you.

Hourly vs Daily rates: What’s best for me?

When it comes to choosing how you will charge your time, there is no right answer. After all, no two contractors are the same, meaning the way you charge for your time will largely depend on your contractor rate and personal preferences.

Once you’ve made the decision, the next step is to find the best umbrella company to work with. That’s where Umbrella Supermarket come into play.

Let Umbrella Supermarket help

With our award-winning umbrella calculator, contractors can quickly and easily find the best umbrella company for their needs in just 2 minutes. Simply enter a couple of details and we will show you a list of umbrella companies best suited to your needs. We will even show you what your payslip would look like under each company, so you can make the right decision. We won’t take your information and then call you later, we give you instant results so you can make the best decision.

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