Hourly rates VS Daily rates – What should you choose?
For contractors, deciding whether to charge hourly or daily rates is an important decision however it’s a hard one to make. It’s important to understand the differences between both hourly and daily rates and to know the pros and cons. Will a daily rate be simpler? Will you benefit more financially with an hourly rate? In this post, we will answer all of your questions.
Hourly rates are the most common for contractors to use. When using hourly rates, every hour worked is an hour paid, hourly rates may be preferable for long term projects, especially as contractors don’t get paid overtime, and rarely get an overtime rate or anything similar
- Normally for rates below £40 an hour.
- Overtime requires sanctioning from a manager.
For contractors deciding to charge over £40 for their services, it is most common for them to charge daily rates. If you choose a daily rate, you will be paid for a specified number of days. The contractor is paid for the total number of days worked, receiving a fixed sum for each day worked, and invoices monthly.
- You are paid for the number of days you work.
- More popular for those on the higher rates (around £400+ per day).
- Clients can ask you to work unexpected extra hours
Pros and cons
It is important to research both hourly and daily rates. Having a good understanding of your industry’s standards with regards to rates is key to knowing what your own rates should be.
Daily rate pros:
- Flexible timing – With daily rates, time is a bit more flexible, unlike using hourly rates. The client can ask you for overtime if they believe the work needs it.
Daily rate cons:
- Unexpected hours – You could end up being expected to work long hours frequently.
Hourly rate pros:
- Better communication – Hourly rates are usually preferred as it’s clear what’s expected from both contractors and the end client.
- No unexpected overtime – Overtime would have to be approved by a manager meaning that its less likley for there to be any surpise additions to your work load.
Hourly rate cons:
- Less cost effective – If the work does need overtime, costs can build-up for the client.
What’s the best option for you?
Whilst there is no black and white answer on what option is best, it is important to consider your own personal needs and your type of work. It is important to do your research on both daily and hourly rates, by doing this you’ll be able to make a well-informed decision. You may find yourself differing between both different options until you find what’s best for you.
Regardless of your chosen rate, If you are looking for an umbrella company that works for you, or just want some questions answered, why not get in touch with us?
For further assistance from our advisors, please feel free to contact us on +447879997547 or email us at firstname.lastname@example.org for any enquiries. You can also send us a message via our website.