What Is a Per Diem Rate?

A per diem rate refers to the amount charged to a client for the work of a self-employed person for one full day of work.

What Is the Average Per Diem Rate?

The average per diem rate corresponds to the average remuneration of self-employed workers in a given industry for the equivalent of one full day of work.

The average per diem rate serves as a guideline. It makes it possible to compare the tariffs of different self-employed workers.

How to Calculate the Average Per Diem Rate?

In order to calculate an average per diem rate, the following information must be considered:

  • Charges (taxes)
  • Operational costs (material, training, administrative time)
  • Time off (to ensure income during periods of inactivity)
  • Market rates
  • The added value of the service performed
  • Business objectives
  • Skills and experience
  • Project deadlines

The following formula can be used to calculate the average per diem rate:

(Annual Personal Expenses + Annual Business Expenses) ÷ Annual Billable Days Worked = Average Per Diem Rate

For example, a self-employed individual who spends $50,000 per year on personal needs and $20,000 on business operations and has 168 billable days of work per year would have an average day rate of $416.67 ($50,000 + $20,000) ÷ 168 = $416.67.

What Are the Advantages of a Per Diem Rate?

The advantages of the per diem rate include:

  • Ensuring a more stable revenue
  • Standardizing service provision
  • Allowing better planning of work

What Are the Risks Linked to a Per Diem Rate?

The risks of the per diem rate include:

  • Not considering the added value of the project
  • Not considering delivery times
  • Lack of flexibility

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