£400/day × 260 working days = £104,000, thinks every employee eyeing contracting. The real conversion is far less flattering — and knowing it protects you from underpricing by tens of thousands.
The Billable Days Reality
Start with 260 weekdays. Remove 25 days of holiday you now fund yourself, 8 bank holidays, 5 sick days, 10+ days of admin, training and business development, and gaps between contracts (2–6 weeks a year if you are good). Realistic billable days: 180–200. £400/day × 190 = £76,000 revenue — before costs.
What Salary Quietly Includes
- Employer pension contributions (3–10% of salary)
- Employer NI paid on your behalf
- Sick pay, holiday pay, parental leave
- Insurance, equipment, training, accountancy — all now your bills (£3,000–£6,000/year)
The Honest Conversion Formula
To match a salary’s total value: (salary × 1.25 for benefits + business costs) ÷ realistic billable days. Matching £50,000 employed: (£62,500 + £5,000) ÷ 190 ≈ £355/day minimum. The old rule of thumb — day rate = salary ÷ 135 — lands in similar territory for a reason.
Do Not Forget IR35
Inside-IR35 contracts are taxed like employment without the benefits — the same day rate is worth 20–25% less in your pocket than outside IR35. Always price the two differently.