When charging a daily rate pays
CHARGING A DAY RATE FOR YOUR WORK, instead of an hourly rate, can be a good way of making sure you get paid a certain amount for each job. This can help you set a budget and ensure you’re bringing in a certain amount of money each week. It also gives your clients some peace of mind, because they will know how much to set aside to pay you.
Charging a day rate can help you set a budget and ensure you’re bringing in a certain amount of money each week.
But just as there are advantages to charging a day rate, there are some disadvantages too.
Pros of day rates
- You’re getting a flat fee, so if the job doesn’t take as long as you anticipated, you’re still getting paid the same amount to complete it.
- It’s easier to get clients, because they’ll feel more secure knowing from the outset how much the job will cost.
- It gives structure to your finances, which is important when you’re first starting out.
Cons of day rates
- It ties you down to one job. Sometimes you can earn more money by doing a number of smaller jobs in one day, rather than just one job.
- It gives you less flexibility to leave the job site, say, to quote on other work, or if any other circumstances arise that mean you have to leave the job periodically. It might not be convenient for you or others to make up extra hours at another time or extend your day.
- If a job runs longer than anticipated, or is more specialised than anticipated, you could find yourself out-of-pocket or not getting paid as much as you could.
- If you run into a previously unforeseen problem or specialised area, it can be difficult to get the client to pay more than what you originally agreed on.
- You must quote thoroughly for the job beforehand, so you need to be experienced to ensure you’re quotes aren’t too low.
Not all projects are well-suited to charging a day rate, particularly if they’re complex and have the potential to be time-consuming.
Jobs that are straightforward or where most of your day will be spent doing labour work are better suited to day rates, leaving the longer, more intricate work that has the potential to take a long time to an hourly rate.
If you want to work out how to set budgets and what kind of rates you should be charging to cover all your on-the-job expenses, get yourself trained up in one of our online cloud accounting courses in MYOB or Xero.
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