A consultant day rate in the UK is set by working backwards, not by looking sideways. Add up what the firm costs to run for a year, including the salary you would pay yourself, add the margin you need to survive a slow quarter, and divide by the number of days you can honestly bill at a realistic utilisation (utilization). That figure is the floor for the grade you actually sell. Grades above and below it are set as a ladder around that number, so that a buyer chooses a rung rather than negotiating a figure. What surveys and competitors publish is calibration, not method.
Why a day rate and not an hourly rate
Most consulting in the UK is bought and sold by the day, and there is a good reason to keep it that way. An hourly rate invites the buyer to count hours, and the conversation drifts towards timesheets. A day rate sells a unit of responsibility: you were there, you were accountable, the work moved. Quote hourly and you also quietly commit to billing every hour of a working day, which nobody does.
Publish both, but derive the hourly rate from the day rate, not the other way round. The hourly figure lets a buyer price a partial week, which is how most advisory work is bought. The day rate protects your floor.
Start from the cost base, not the market
When my co-founder Steve and I started, in 2013, the business that became DevOpsGroup, a services company helping other businesses build and run software, we had years of experience of the work and no idea what to charge for it. The temptation was to pick a number from what others published. It is the wrong place to start, because a competitor’s rate tells you nothing about what your firm costs to run.
The arithmetic is short:
- Cost base. Every cost of running the firm for a year: salaries including your own at a rate you could hire someone for, employer’s National Insurance and pension, software, insurance, accountancy, premises or the home-office equivalent, travel that cannot be recharged, and a line for the tools and training that keep the work saleable.
- Margin. What you need above cost. Not what you would like: what lets you carry a slow quarter, hire ahead of demand and still be there next year.
- Billable days. The days you can honestly invoice. This is where most first rate cards go wrong, and it gets its own section.
Divide the first two by the third and you have the day rate for the grade doing the work. It is the floor. If the market will bear more, take it. If it will not, the answer is a lower cost base or a different market, not a lower rate.
A worked example, invented. Suppose a two-person consultancy has an annual cost base of £180,000 including both founders’ salaries, and wants £60,000 of margin on top: £240,000 for the year. Each founder has around 220 working days once bank holidays and leave are removed. If each spends two days a week selling and running the company, that leaves about 130 billable days each, 260 in total. £240,000 divided by 260 days is roughly £925 a day. The figures are chosen to show the method; none is a recommendation.
Billable days: the number everyone overstates
The single most common mistake in a first rate card is to assume five billable days a week. Nobody does. Selling, proposals, holidays, illness, training and the gap between one engagement ending and the next starting are all unbilled.
Utilisation, the share of available days that turn into invoices, is the number that decides whether a day rate works. A founder who is also the sales team might bill half their working days in a good year; a consultant with someone else selling for them might bill three quarters. Set the day rate on the utilisation you achieve, not the one you hope for, and review it once a year against what you actually billed rather than what you published. The gap between those two numbers is your real price list.
The utilisation rate entry covers the formula, what counts as good and where the number misleads.
Grades and the blended rate
One rate is a number. A ladder of rates describes your firm, and it does something a single figure cannot: it teaches a buyer what seniority costs.
Our cards were borrowed, not designed. Another supplier had published theirs on the government’s G-Cloud buying framework, and early on I copied the structure because it would make getting onto the framework easier. The levels came from SFIA, the Skills Framework for the Information Age, which describes seven levels of professional responsibility rather than job titles. We set the band, bottom rung and top rung, before we settled the names, and the band was the decision that mattered.
For private buyers we ran a plainer five-grade house card, practitioner to principal, mapped onto the same levels so no buyer could compare the two and find a cheaper way in. Soon after it went out, as I recall it, a prospective client came back having priced the job off the middle rung. Nobody had told them to buy there. Publish five prices and a buyer will not take the cheapest, because it advertises its own limits, and will not take the dearest, because they are not buying strategy. They take the rung that looks like the work.
Two consequences follow:
- Model the blended rate on the rung you sell, not on the average of the ladder. If your grades are evenly spaced the two agree and hide the point. Space them unevenly, as most firms do once the top grade carries a premium, and the average drifts above the rung that actually earns the revenue. Plan on the middle and your utilisation will not surprise you.
- Work the ladder backwards into a hiring plan. If the middle rung is where the revenue is, that is where the next hires go: not at the top, where it is more flattering to recruit, and not at the bottom, where it is cheaper.
And one caution. When we sent that five-grade card we were two founders and a handful of people we could call on. A ladder is how a small firm makes its offer legible, and it is a promise. Never quote a grade you cannot staff within the notice period of the engagement, or if you must, say plainly who will do the work.
What a day is
Define the day on the card itself. Ours was eight hours, which sounds like a trivial line until someone bills you for a ten-hour one. State whether the day is on site or remote, whether travel time is inside it, how a half day is charged and what happens to an evening call.
Put the commercial terms on the card too, not in clause nineteen of the contract. A term hidden in the paperwork is something a customer discovers. A term printed on the rate card is something a customer chooses, and it is discussed by the two people already discussing price rather than later, by lawyers, in a worse mood. Volume breakpoints, a discount for paying up front and the contract lengths on offer all belong there.
When the buyer says it is too expensive
Hold the rate. Change the scope.
A rate is a statement about what a grade of responsibility costs. Cut it once and you have told the buyer, and yourself, that it was never true. So when a proposal comes back as too expensive, the conversation is about the work: fewer days, a narrower first phase, a different grade doing part of it, the buyer’s own people taking a piece. The price falls because the job shrank, not because the day got cheaper.
What UK surveys can and cannot tell you
You will find published averages for what consultants charge in the UK, and I am not going to cite any of them here. Use them for one thing only: checking that the number your cost base produced is in the same universe as the market you sell into. They cannot set your rate, because an average consulting fee blends sole traders with large firms, junior grades with partners and hourly with daily. A figure in the middle of that blend describes nobody, and it can never tell you whether the number works for your firm. Only your own cost base and utilisation can.
Where to go next
The consulting rate card playbook, in development, takes the borrowed ladder through the day definition, the commercial terms and the blended rate. The rate card builder, also in development, is the interactive version: a graded card modelled on your own numbers. For the vocabulary, start with what a rate card is.