Methodology: Consulting Day Rate Calculator

1. Scope

Derives a consulting day rate from target annual net income, utilisation, overhead, and an effective tax rate. It does not estimate market-clearing rates — benchmark against BLS OEWS medians or named-peer rate cards.

2. Inputs and outputs

Inputs

targetAnnualNetIncome number (currency)
billableDaysPerYear number default: 180

Utilisation: ~60–70% of 250 working days.
annualOverhead number (currency)
effectiveTaxRate percent default: 30

Outputs

requiredGrossRevenue

(net + overhead) / (1 − taxRate).
dayRate

requiredGrossRevenue / billableDaysPerYear.

Engine source: src/lib/consulting-day-rate-calculator/engine.ts

3. Formula / scoring logic

gross_revenue = (target_net + overhead) / (1 - tax_rate)
day_rate      = gross_revenue / billable_days

4. Assumptions

Utilisation default 180 days is conservative (~72% of 250 working days). Junior consultants may hit higher; senior specialists lower.
Overhead covers software, insurance, professional services, and workspace — anything you pay regardless of billable activity.
Tax rate is a blended effective rate; actual liability depends on jurisdiction and entity type.

5. Data sources

US BLS OEWS — management analysts / consultants median hourly wage as of 2024

6. Known limitations

Market-clearing rates can be far above or below a cost-plus day rate. Triangulate with peer rate cards.
Does not model retainer, value-based, or equity-swap engagements.

7. Reproducibility

Input
targetNet = $150,000, billableDays = 180, overhead = $20,000, taxRate = 30%.

Expected output
required_gross ≈ $242,857, day_rate ≈ $1,349.

8. Change log

2026-04-24 methodology page first published.