How to convert a day rate to an hourly rate (and back)
Agencies and clients mix day rates and hourly rates all the time. Converting between them is simple arithmetic, but getting the rounding wrong can leave invoice totals a few pence out, which is enough for an accounts team to reject them. Here's the method, with worked examples.
On this page
The formula
Hourly rate = day rate ÷ standard hours in a day
Day rate = hourly rate × standard hours in a day
The key is the "standard hours" figure. It must be what you and the client agreed, not what you happen to work. Common standard days are 7.5 hours (typical office hours), 8 hours (common in construction and logistics) and 10 hours (some site work and shifts).
Quick reference table
| Day rate | 7.5-hour day | 8-hour day | 10-hour day |
|---|---|---|---|
| £120 | £16.00 | £15.00 | £12.00 |
| £150 | £20.00 | £18.75 | £15.00 |
| £165 | £22.00 | £20.625 | £16.50 |
| £180 | £24.00 | £22.50 | £18.00 |
| £200 | £26.666… | £25.00 | £20.00 |
| £250 | £33.333… | £31.25 | £25.00 |
| £300 | £40.00 | £37.50 | £30.00 |
Notice the rates that don't divide neatly, like £165 over 8 hours (£20.625) or £200 over 7.5 hours (£26.666…). That's where invoices go wrong.
Avoiding rounding errors
Take a £200 day rate and a 7.5-hour day. The exact hourly rate is £26.6666… If you round it to £26.67 and multiply back by 7.5, you get £200.03. Round down to £26.66 and you get £199.95. Neither matches the agreed £200.
The reliable approach:
- Keep the hourly rate at full precision in your calculations.
- Work out each line as exact rate × hours.
- Round the line amount to the nearest penny.
- Show the unit rate rounded to 2 decimal places, for readability only.
Done this way, 7.5 hours at £26.666… comes to exactly £200.00, 8 hours at £20.625 comes to exactly £165.00, and half days come out at exactly half the day rate.
Part days
If you work less than a full day, the hourly rate makes billing fair and simple:
- 4 hours on a £165 / 8-hour day: 4 × £20.625 = £82.50 (exactly half).
- 6 hours on a £180 / 8-hour day: 6 × £22.50 = £135.00.
- 5.5 hours on a £200 / 7.5-hour day: 5.5 × £26.666… = £146.666…, so £146.67.
Some contracts say part days are paid as half or full days instead of by the hour. If yours does, follow the contract and describe the line accordingly (e.g. "Half day").
Pricing overtime from a day rate
Once you have the exact hourly rate, overtime is just a multiplier: hourly × 1.25 for time and a quarter, × 1.5 for time and a half, and so on. On a £165 / 8-hour day, overtime at time and a quarter is £25.78125 an hour, so 2 hours is £51.56. See overtime rates on invoices for more.
Converting an hourly offer into a day rate
If an agency offers £22 an hour and you're used to thinking in days, multiply by the standard hours: £22 × 8 = £176 a day, or £22 × 7.5 = £165 a day. Check the standard day length before comparing offers: £176 for an 8-hour day and £165 for a 7.5-hour day are the same hourly rate.
From day rate to a rough annual figure
A day rate only turns into income for the days you actually work. To compare a contract with a salaried job, estimate your billable days honestly: subtract weekends, bank holidays, the holidays you plan to take, sick days and gaps between contracts. For example, 220 billable days at £165 is £36,300 a year before tax and costs. As a self-employed worker you also pay for your own tools, travel, insurance and pension, and you don't get paid holiday. This is a rough planning sum, not tax advice.
A note on minimum wage
If you're an employee or an agency worker paid through PAYE, your hourly pay must not fall below the National Minimum Wage or National Living Wage for your age. GOV.UK publishes the current rates. Genuinely self-employed people aren't covered by minimum wage law, but if a "day rate" works out very low per hour, it's worth checking your employment status.
Frequently asked questions
How do I convert a day rate to an hourly rate?
Divide the day rate by the agreed number of hours in a standard day. For example, £165 ÷ 8 = £20.625 an hour.
Is a working day 7.5 or 8 hours?
There's no single rule. Office-based roles are often 7.5 hours and site or shift work is often 8 or more. Use whatever your contract says.
Why is my invoice total a few pence out?
You probably rounded the hourly rate before multiplying. Keep the exact rate for calculations and round only the final line amount.
How do I bill half a day?
Either bill the hours at the exact hourly rate (4 hours of an 8-hour £165 day = £82.50) or bill a half day if your contract says so.
How do I compare an hourly offer with my day rate?
Multiply the hourly rate by the standard hours per day. £22 × 7.5 = £165, and £22 × 8 = £176.
Sources
This guide is general information, not legal, tax or financial advice. Rules and rates change, so check the linked GOV.UK pages for the current position.