A: The mistake many contractors make when calculating their daily rate is that they just focus on the salary that they would like to take for themselves and divide this by 52 weeks.
How much salary you would like to take for yourself is the corner stone of the calculation but there are a number of other issues to consider. The main ones however would be the time you have available for work and other business overheads.
When deciding on the appropriate rate to charge you should not forget the other overheads besides your salary that you will need to pay for out of these monies e.g. accountant, solicitor, pension, travel expenses etc. All of these overheads should be added together with the salary you would expect to get to give you an overall cost for the year.
You then need to work out how many days per year you will be available for work. You need to take account of holidays, bank holidays, sick days, periods without work etc. Generally, people will use 220-230 days.
You then divide your overall cost by the number of days to get your day rate. You should always compare your calculation to industry averages to ensure that you are not severely over/under pricing.
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