Written for independent consultants trading through their own companies, interim and fractional executives, and boutique consultancies that work with associates.
The short version
- Divide your fee income by your available days.That is your effective day rate, and it has to cover the gaps between contracts. Track utilisation too: billable days divided by available days.
- Build contingency into every fixed fee.A fixed fee moves the risk of overrun to you. Add a buffer to the price and check your effective rate if the days slip.
- Raise a change request when client input slips.List what the client must provide in your statement of work. Raise it the day one slips: that is how you claim the difference back.
Most consultants set a day rate and stop there. But the days between contracts and the extra days a fixed fee absorbs both come out of the same year. Two numbers tell you what you really earn, and they are worth working out before you quote the next piece of work.
The two numbers to track
- Utilisation: billable days divided by available days.
- Effective day rate: fee income divided by available days. This is the rate that has to cover the gaps between contracts.
Say which days you count. Write down whether available days exclude leave and bank holidays, and whether fee income excludes VAT and expenses, or the numbers will not compare from one quarter to the next.
| 150 billable days at £750 | £112,500 |
| 70 available days not billed | £0 |
| Fee income across 220 available days | £112,500 |
| Effective day rate | £511.36 |
£112,500 / 220 available days. Utilisation is 150 / 220 = 68.18%.Indicative worked example, as of Oct 2026.
Fixed fees: price the overrun before it happens
Choose between day rates, fixed fees, retainers and value fees according to who should carry the risk of overrun. A fixed fee moves that risk to you. When you take it, build contingency into the price and work out what the effective rate becomes if the days slip.
| 20 days at £800 | £16,000 |
| 15% contingency | £2,400 |
| Fixed fee quoted | £18,400 |
| Effective day rate if it takes 30 days | £613.33 |
£18,400 / 30 days. If it takes 24 days, £18,400 / 24 = £766.67.Worked example, as of Oct 2026.
Retainers drift the same way. For example, a £3,000 retainer for 3 days is £1,000 a day, but if the client uses 4.5 days it falls to £666.67. Write the days a retainer buys into the engagement letter, and record any extra days in a change request before you work them.
In that worked example, 42 days turns a planned £1,200 a day into an effective £857.14. The change request is how you claim the difference back.
Margin is not markup
If you resell associates, know which number you are quoting. Margin is (charge minus cost) divided by charge. Markup is (charge minus cost) divided by cost. For example, an associate costing £550 a day sold at £800 is a 31.25% margin but a 45.45% markup, so quoting the markup as your margin overstates it.
Do not price from a day rate, utilisation or win-rate figure that has no named, dated source. Price from your own ledger and CRM, the client's rate card, current framework prices or a dated trade-body survey.
Asked in Greymill
As quoted: £36,000 / 30 days = £1,200 a day
At 42 days: £36,000 / 42 days = £857.14 a day
Given away: 12 days at £1,200 = £14,400 of your time
Raise a change request today. The data was theirs to provide, so put the 12 extra days in a change request before you work them. That is how you claim the difference back.
On the next fixed fee, list what the client must provide in your statement of work, and build contingency (a buffer for overruns) into the price.
Want me to draft the change request?
Ask it about your own business
Paste this into Greymill with your own figures, and Cash & Profit works it through for your business.
I run a consulting business in the UK. Last year I billed [number] days at [day rate] out of about [number] available days. I am quoting a fixed fee for [project], which I expect to take [number] days and which depends on the client providing [list the dependencies]. Work out my utilisation and effective day rate, price the fixed fee with contingency, and show me what my effective rate becomes if the work runs [number] days over.
More for consulting and advisory in the UK
- How much of the money in my consulting company is actually mine to take?In a one-person consulting company part of every invoice belongs to HMRC, and drawing the rest the wrong way can lock cash away for at least a year.Read the lesson
- Is this contract inside IR35, who decides, and what does it do to my take-home?On every engagement through your own company, the client's size, sector and UK connection decide who makes the IR35 call, and a client's SDS can be formally challenged.Read the lesson
- Can I take a success fee for finding investors, or help with a client's visa application?Introducing investors, recommending investments, dealing with HMRC for clients and advising on visas each sit behind a regulatory line, and crossing some of them without permission is an offence.Read the lesson
- The client's contract makes me liable for everything and wants to own my toolkitAdvice contracts hurt consultants in two places: an uncapped or stricter duty than the law implies, and IP clauses that hand over the methods you reuse on every job.Read the lesson
- Placing associates with clients without their IR35 bill coming out of my marginWhen a boutique places associates who work through their own companies, it becomes a link in the off-payroll chain and can end up paying employer NI on their fees.Read the lesson
- How do I win public sector work, and stop depending on one big client?Consultancies win through referrals, a narrow niche and frameworks, and public sector work comes with its own rules on registration, conflicts, payment and IR35.Read the lesson
- Closing my consulting company: strike-off or liquidation, and the claim that arrives afterwardsClosing a consulting company the cheap way can turn retained profit into income, and stopping your PI on the same day can leave a later claim with nothing to answer it.Read the lesson
Open the interactive lesson · Every consulting and advisory lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- api/lib-statutory-uk.js UK_STATUTORY (Show the maths: rate and utilisation)
- Bank Rate and MPC dates (Source and date every figure)
- Annual Industry Report 2026 summary, published 10 July 2026, standout results (Source and date every figure)
- s.61T(3) to (5) (Deliverables in house style)
- CPR 26.9 (track limits, from 1 Oct 2023); CPR 26.13 (interest and costs excluded from the claim value) (Hard cases: contracts and payment)