How to read a day rate

Founders often react to a day rate the same way: €1,200 sounds like a lot. It is a lot, per day. The question is whether it is a lot per result, and that needs a little arithmetic.

What a day contains

A day on a retainer is eight hours of work. Not eight hours of meetings. It includes preparation, the calls, the model or the pack, and the write-up at the end. There are no separate lines for travel time, email or reading, which is the usual place where hourly bills grow.

You pay for the days you book, and you decide how many. Two days a month costs €2,400. Eight days costs €9,600 before any term discount.

Compare with a salary

A full-time CFO at €180,000 costs the company more than the salary. Add 30% for benefits and taxes and a recruiting fee of 20% of the salary, and the first year costs €270,000. Spread over about 215 working days, one day of a full-time CFO costs roughly €1,255. The two rates are close.

The difference is not the price of a day. It is how many days you need. A company that uses eight days a month of finance leadership pays for eight. A full-time hire pays for about eighteen, and the other ten are idle unless the company has the work.

Compare with an outsourced firm

An outsourced firm usually charges a monthly fee for a fixed scope: bookkeeping, payroll, tax. That fee is lower than a day rate, because the work is lower on the ladder. It does not include a forecast, a board pack or a negotiation with a bank.

Most companies need both. A firm keeps the books. A fractional CFO decides what the books mean. The two should talk to each other and the founder should not have to translate.

Compare with your own time

The most expensive finance person in an early company is the founder. If the founder spends two days a month on spreadsheets and each day is worth far more than €1,200 in selling, hiring or building, the day rate is not a cost. It is a trade.

Three questions before you sign

Ask what exactly a day includes. Ask what the minimum term is and how to leave. Ask for the previous clients' results, in numbers, in writing. A professional day rate answers all three without a pause.

Then do the sum on your own numbers. The calculator on the engagements page takes a minute, and it will tell you honestly when the answer is a full-time hire.