Use full day hours after the hourly floor
Once billable utilization has been used to calculate a sustainable hourly floor, the day rate should use the full reserved workday. The RateFloor formula is hourly quote x standard day hours x (1 + day-rate premium), rounded upward.
Do not multiply by utilization again. The hourly floor already recovered non-billable operating time by dividing required revenue over a smaller number of sellable hours. Applying utilization a second time discounts the capacity cost twice.
Day-rate check
Measure the double-discount shortfall
The utilization input appears only to reveal the incorrect alternative. It does not enter the correct day rate.
Worked example: $100 per hour and an eight-hour day
Assume the reverse margin model has already produced a rounded $100 hourly quote using 70% billable utilization. An eight-hour day at that floor is $800. A 15% reservation premium makes the day quote $920.
The incorrect formula multiplies by 70% again: $100 x 8 x 0.70 x 1.15 = $644. The client receives control of an eight-hour window, but the business receives only $80.50 per reserved hour. The $276 daily shortfall is not a different pricing strategy. It is the same utilization loss deducted twice.
Choose the pricing unit that matches the promise
Hourly pricing fits work where the client buys measured effort and the scope can change incrementally. It makes time visible, but it can create approval friction when every additional hour needs discussion.
A day rate fits workshops, on-site sessions, production days, consulting blocks, and other work where the client reserves a continuous capacity window. Define what counts as a day, what preparation is included, whether unused hours roll forward, and how work beyond the window is approved.
Project pricing fits a defined outcome with clear scope, acceptance rules, revision limits, dependencies, and change control. Convert the quote floor into an internal project floor using the full expected effort, then decide whether value, risk, and uncertainty support a higher proposal.
A premium is an explicit assumption, not a market fact
RateFloor defaults to a 15% day-rate premium because a dedicated day can fragment the calendar, limit other bookings, and require concentrated preparation. The percentage is editable. Use zero when a day is simply a convenient invoicing unit with no extra reservation cost. Use a larger value only when the commercial conditions justify it.
Write the day boundary into the proposal. State the number of hours, the time zone, availability expectations, preparation, breaks, travel, cancellation terms, and overtime treatment. A correct formula cannot repair an undefined scope.
Sources and limitations
This guide explains RateFloor's internal pricing definition. It does not claim that every industry charges a day premium or that a particular client will accept one. Contract terms and local law may affect time, cancellation, and overtime obligations.
- RateFloor methodologyExact day-rate formula, input boundaries, and rounding rules.
- Billable utilization guideWhy utilization belongs inside the hourly floor only once.