How to work out your daily IT rate

One of the most common questions we get asked here at www.ComputerJobs.ie is how do you work out a contractor’s daily rate.

We suggest a simple rule of thumb as follows:

Example: A .NET web developer with 5 years commercial experience and a degree will probably command a permanent salary of 55K - 60K.  If we add 33% to this (due to the uncertain nature of contracting, they are usually in and out within 3-6 months-hence always looking for next contract, this is deemed his/her reward for contracting) this will give an annual salary of  just under 80K. 

This is then divided by 230 which is the available “billable” days in the year to work, excluding holidays (14 - 20), days sick (5-10) and bank holidays (4) as well as 104 weekend’s days bring the total of 365 days in the year.

So if you divide 80K by 230 you get 347 which is his / her daily rate or rounded to 350 per day.

The recruitment company will then usually add a margin of between 15-20% for their services in both finding the candidate and payrolling them, ie, paying the contractor and waiting to be paid by the client.  So the client will then expect to pay between 400-420 per day for a senior .NET developer.

However, there are always different factor’s which must be considered as the above formula does not always apply. 

High demand for specific skills can add a premium of anywhere between 15-25% on to a contractors rate.

Industry experience such as banking can also add a similar increase.

Using a consulting house/software house that will also be involved in managing an IT project can mean the rate paid by the client will usually be double and treble the contractor’s rate, in this scenario, between 800-1200 per day.

For more information, visit www.ComputerJobs.ie - “Contractor’s corner”.

Niall Kelly is a Director of both www.ComputerJobs.ie and www.SalesJobs.ie and was involved in IT recruitment in Dublin & Australia for 15 years as well as running niche job boards for the last 14 years.