Day rate benchmarks are useful, but don’t paint the whole picture
As we come to the end of the year, we’re starting to see a few updated freelancing Day Rate benchmark reports.
Benchmark data is really useful to double check you’re not under-charging, but must be taken with a pinch of salt.
Day rates only show a tiny part of the picture.
Yes - some day rates in some sectors have increased, but equally, the market feels like there is less work generally, more freelancers fighting (and possibly undercutting) for the same work and project lengths are shorter.
Whilst there might be tasty looking numbers for more senior day rates, we’re also seeing briefs being pitched at more junior levels, a sort of underhanded way of reducing the day rate but getting more experienced individuals.
Equally, inflation and cost of living has exceeded the increase in day rates in most cases, and depending on which data you look at day rates across the board have declined. Day rates also don’t factor in increases in employer NIC contributions (for limited company owners), or the increased cost of running a business.
Additionally, benchmark data is often from intermediaries, rather than freelancers themselves, i.e. data comes from platforms, recruiters and agencies - all of which have a vested interest in showing inflated day rates (because they’re generally taking a percentage of the day rate).
Benchmarking data often will exclude direct to client work (which is often higher paid, but also can be wildly variable in terms of day rate). Take a look at the source of the data to understand if there are inherent biases.
Day rates also don’t reflect increasing numbers of projects which are fee-based, rather than day rates based, or touch upon retainers, longer-term contracts, inside IR35 roles, etc.
So if you’re looking at day rate data - make sure you’re factoring in the bigger picture, as well as your own personal circumstances and needs.
We mustn’t be driven by the market too much, but rather the value we know our work has, else it risks a race to the bottom.