What’s Actually Included in That Day Rate?

When you’re hiring a specialist contractor — whether in quality, regulatory, clinical, or commercial — one of the first questions you’ll likely ask is:

“What does this actually cost me?”

It’s a fair question.

Contractor rates can feel like a grey area. You see a headline day rate (say, £600), but you’re not always clear what’s behind it.

Is it just the contractor’s pay? What else is baked in? And are you really getting value?

Let’s break it down.

What Makes Up a Contractor’s Day Rate?

When you receive a quote from a recruitment partner, that figure usually includes two key components:

1. The Contractor’s Pay and Statutory Costs

This is what the contractor is paid directly, plus any statutory employer costs (if they’re being engaged via PAYE). That includes:

• Gross day rate (based on skills, experience, and market rates)

• Holiday pay (even contractors accrue this if PAYE)

• Employer National Insurance contributions

• Employer pension contributions

• Apprenticeship Levy (where applicable)

In limited company setups (outside IR35), these statutory costs may not apply — but you still need to understand what’s included and how the rate has been calculated.

2. The Agency’s Margin

This covers the work the agency does — before, during, and after the hire. It typically includes:

• Market mapping and sourcing

• Candidate screening, shortlisting, and referencing

• IR35 status checks and compliance support

• Onboarding and timesheet setup

• Weekly/monthly payroll processing

• Ongoing support (replacements, performance issues, etc.)

• Insurance and liability cover

It’s not just about “finding someone”. You’re outsourcing risk, admin, and time-consuming compliance.

Real Example: £600/Day Contractor

Let’s say you’re quoted £600/day for a contractor working via PAYE.

Here’s how that might break down:

(Note: these figures are illustrative and vary depending on contract structure and IR35 status.)

What Are You Really Paying For?

Hiring a contractor isn’t just about getting a name on a timesheet.

You’re paying for:

✅ Speed – Specialist talent ready to deliver from day one
✅ Flexibility – Scale up or down depending on need
✅ Reduced Risk – If it’s not the right fit, the contractor is replaced
✅ Compliance – IR35, right to work, insurance and contracts handled
✅ Admin-free delivery – Payroll, timesheets, and onboarding managed for you

The Bottom Line

A contractor might seem expensive at first glance — but once you account for statutory costs, compliance, and the support you’re receiving, the picture changes.

What you’re really buying is a ready-to-go specialist — without the headcount commitment, and with all the legal and admin work handled for you.

Viewed through that lens, the day rate starts to look like real value.