How to set day rates for public sector IT work

Many public IT contracts and frameworks ask for daily or hourly rates by role. These rates matter more than they seem, because they're often fixed for the life of a framework or contract and compared directly with competitors.

Start from your costs

For each role, work out your cost per billable day:

1. Annual cost of the person: salary plus benefits, payroll taxes, equipment and software.
2. Share of overheads: rent, insurance, management, sales and bid time.
3. Billable days per year: often 180 to 210 after holidays, training, sickness and bench time.

Cost per day = (annual cost + overhead share) ÷ billable days. Then add margin. Many IT services firms aim for a gross margin of 30% to 50% on day rates, depending on the market.

Check the market

• Framework rate cards. Some frameworks publish maximum or average rates, and some buyers publish rates paid.
• Past awards. Award notices and disclosure lists show contract values, which can be divided by estimated days. See using contract award data.
• Role standards. In the UK, many buyers describe roles using SFIA levels or the government Digital, Data and Technology profession framework. In Canada, federal supply arrangements like TBIPS and ProServices define resource categories and levels.

Match roles carefully

A "senior developer" in your firm may not match the buyer's definition. Read the role descriptions and the experience they require, and map your people honestly. Pricing a junior person at a senior rate may fail evaluation, and the reverse leaves money on the table.

Plan for years, not months

Frameworks can last four years or more, with rates fixed or only adjustable at set points. Build in:

• Expected salary increases over the term.
• Whether the framework allows annual indexation.
• Whether the rates are maximums, so you can quote lower in a mini-competition.

Common questions

Should government day rates be lower than private sector rates?

Not necessarily. Public work often comes with longer contracts and reliable payment, which some firms reflect in slightly lower rates, but rates still need to cover the real cost of bidding and compliance.

Can I change my rates on a framework?

Only as the framework allows, often at set review points or through indexation. Some let you offer lower rates in each mini-competition.

How do buyers compare day rates?

They often multiply each rate by an estimated number of days per role to get a total evaluated price, so rates for the most-used roles matter most.