Calculating Day Rates

I’ve blogged on daily rates for consultants (mainly ‘sales’ ones but equally applicable if you’re trying to sell such services) and noted the 1/100 concept.

In discussions earlier this week (with a consultant in a different field from sales) I came across an interesting and different way of working out your day-rate.

Think about your monthly total overhead figure
Unlike the 1/100 school, who tend to quote in the television private eye way – “plus expenses” – this figure includes your extra costs estimate.

Multiply it by 13
Adding an extra month to ensure a “13th cheque” bonus, rather than to cover any unforeseen extras.

Divide by 10
As even if flat-out, you’re likely to only physically work for ten months of the year due to holidays, sickness and the like, and cannot guarantee making an American IT-style model work of double charging the same time to different clients.

This then becomes your true monthly target, so dividing by the month’s 20 work days you get your chargeable per diem.

For comparison, here’s workings for the two methods side by side. Deducing an appropriate figure on which to base this exercise is fraught with potholes, so to tread a middle path, I’ll take an average figure as tracked by IT Jobswatch. It could be dollars or euros but happens to be in pounds sterling, but you’ll get the idea. I tapped in ‘sales trainer‘, which doesn’t necessarily have an exact match on their technology-orientated site, nevertheless as a guide, a 48,000 amount can suffice over the year:

1/100 : 48000/100 = 480 a day

13/10 : (48000/12 =) 4000 x 13 = 52 000/10 = 520 a day

So in this case, if your expenses come in at less than 40 a day on top, then you make more the second way, if not, then it’s the first way for you. Note that this gap of course widens as your expectations rise.

It’s an interesting exercise. I have two further comments from my experience.

First is that not many people lead sales teams are prone to have recently bought consultancy services, so they don’t necessarily have a yardstick with which to frame your price. As a result, comparisons will often be drawn from other consultancy spheres. These can include people like software engineers they’ve encountered, from any crm work they’ve paid for as CSOs, or even that their finance colleagues might pass on from ERP work for instance.

And secondly, the more specialised the consultant skill, the more that can be charged for it. Generic sales training is likely to covet a standard rate, whereas any extra focus and precision you can show will allow rates to rise.