> ## Documentation Index
> Fetch the complete documentation index at: https://docs.charle.agency/llms.txt
> Use this file to discover all available pages before exploring further.

# Day Rates

> How revenue per day is calculated and tracked in CharleOS

Day rate is the most important profitability metric in CharleOS. It tells you how much you're earning for each day of work delivered—higher is better.

## The Two Day Rates

CharleOS tracks two different day rates that tell you different things:

<CardGroup cols={2}>
  <Card title="Sold Day Rate" icon="file-contract">
    What you **promised** to deliver at based on the contract
  </Card>

  <Card title="Actual Day Rate" icon="chart-line">
    What you're **actually** earning based on work done
  </Card>
</CardGroup>

The difference between them shows whether you're over-delivering or under-delivering relative to the contract.

## Sold Day Rate

The sold day rate is calculated from the client's contract and represents the agreed-upon value:

<CodeGroup>
  ```formula Formula theme={null}
  Sold Day Rate = Monthly Cost ÷ Days Allocated

  Where: Days Allocated = Monthly Hours ÷ 7.5
  ```

  ```example Example theme={null}
  Monthly cost: £5,000
  Monthly hours: 60 hours
  Days allocated: 60 ÷ 7.5 = 8 days
  Sold day rate: £5,000 ÷ 8 = £625/day
  ```
</CodeGroup>

<Note>
  This rate is **fixed**—it doesn't change unless the contract changes. It's your baseline for measuring performance.
</Note>

### Why 7.5 Hours Per Day?

CharleOS uses 7.5 hours as the standard billing day. This is an industry-standard measure for professional services—a full day's worth of billable work.

## Actual Day Rate

The actual day rate shows what you're really earning based on work delivered:

<CodeGroup>
  ```formula Formula theme={null}
  Actual Day Rate = Prorated Revenue ÷ Days Used

  Where:
  - Prorated Revenue = Monthly Cost × (Time Used ÷ Time Allocated)
  - Days Used = Billable Minutes ÷ 450
  ```

  ```example On-Target Delivery theme={null}
  Monthly cost: £5,000
  Monthly hours: 60 hours (3,600 mins)
  Billable minutes used: 2,700 mins (45 hours)

  Prorated revenue: £5,000 × (2,700 ÷ 3,600) = £3,750
  Days used: 2,700 ÷ 450 = 6 days
  Actual day rate: £3,750 ÷ 6 = £625/day

  ✅ Exactly on target!
  ```
</CodeGroup>

### Why "Prorated" Revenue?

Using prorated revenue prevents early-month inflation. Without it, if you logged 1 day of work on day 2 of the month, the system would divide the full £5,000 by 1 day = £5,000/day (artificially high).

With prorating, on day 2 of the month with 1 day logged:

* Time used: 450 mins (1 day)
* Time allocated: 3,600 mins (60 hours)
* Prorated revenue: £5,000 × (450 ÷ 3,600) = £625
* Actual day rate: £625 ÷ 1 = **£625/day** ✅

This correctly shows the day rate based on work delivered.

## Understanding Variance

The difference between sold and actual day rates tells you how well you're performing:

```formula Variance theme={null}
Variance = Actual Day Rate - Sold Day Rate
Variance % = (Variance ÷ Sold Day Rate) × 100
```

<Tabs>
  <Tab title="Positive Variance">
    **Actual day rate > Sold day rate**

    You're earning **more** than expected per day. This happens when:

    * You're delivering efficiently (completing work in less time)
    * You're banking time on tasks
    * Estimates are accurate or conservative

    **Example:** Sold £625/day, Actual £700/day = +£75 variance (+12%)

    🎉 This is good! Keep it up.
  </Tab>

  <Tab title="Zero Variance">
    **Actual day rate = Sold day rate**

    You're delivering **exactly** as contracted.

    **Example:** Sold £625/day, Actual £625/day = £0 variance (0%)

    ✅ Right on target.
  </Tab>

  <Tab title="Negative Variance">
    **Actual day rate \< Sold day rate**

    You're earning **less** than expected per day. This happens when:

    * You're over-servicing the client
    * Tasks are taking longer than estimated
    * There's scope creep
    * Estimates were too optimistic

    **Example:** Sold £625/day, Actual £500/day = -£125 variance (-20%)

    ⚠️ This client needs attention.
  </Tab>
</Tabs>

## Day Rate Thresholds

CharleOS uses thresholds to categorize performance and trigger alerts:

| Status              | Day Rate  | Badge                                          | What It Means                           |
| ------------------- | --------- | ---------------------------------------------- | --------------------------------------- |
| **Amazing**         | ≥ £900    | <span style={{color: 'green'}}>●</span> Green  | Exceptional profitability               |
| **Goal**            | £800-£899 | <span style={{color: 'green'}}>●</span> Green  | On target, profitable                   |
| **Under Target**    | £680-£799 | <span style={{color: 'orange'}}>●</span> Amber | Acceptable but could improve            |
| **Below Breakeven** | \< £680   | <span style={{color: 'red'}}>●</span> Red      | Losing money, needs immediate attention |

<Warning>
  **Breakeven threshold: £680/day**

  Below this, the agency is losing money (0% EBIT). Clients below breakeven should be reviewed urgently for:

  * Scope management
  * Estimate accuracy
  * Process efficiency
  * Contract renegotiation
</Warning>

## Over-Serviced Clients

A client is "over-serviced" when the actual day rate is significantly below the sold day rate—meaning you're giving them more work than they're paying for.

### Severity Levels

| Level        | Variance     | Action Required                                    |
| ------------ | ------------ | -------------------------------------------------- |
| **Mild**     | 10-19% below | Monitor trends, identify causes                    |
| **Moderate** | 20-29% below | Review processes, tighten scope                    |
| **Severe**   | ≥30% below   | Immediate action—review contract, scope, estimates |

**Example:** A client with £625 sold day rate but £440 actual day rate:

* Variance: -£185 (-30%)
* Classification: **Severe over-servicing**
* Action: Urgent review needed

## Where to See Day Rates

Day rates are displayed throughout CharleOS:

<AccordionGroup>
  <Accordion title="Your Dashboard (IC)" icon="user">
    See your personal **weighted average day rate** across all clients you've worked on. This shows your overall profitability.

    The weighting is based on billable time—clients you've spent more time on have more influence on your average.
  </Accordion>

  <Accordion title="Client Profiles" icon="building">
    Each client profile shows:

    * Current sold day rate (from contract)
    * Current actual day rate (from work done)
    * Month-over-month trend
    * Variance from target
    * Status badge (green/amber/red)

    This helps you track client profitability over time.
  </Accordion>

  <Accordion title="CSM Dashboard" icon="headset">
    If you're a Client Success Manager, you'll see the **average day rate** across all your clients. This shows the profitability of your portfolio.
  </Accordion>

  <Accordion title="Department Dashboard" icon="users">
    Managers see their **department's weighted average day rate**, showing overall team profitability.
  </Accordion>

  <Accordion title="Agency Dashboard" icon="building">
    Admin users see the **agency-wide weighted average day rate**, showing overall business profitability.
  </Accordion>

  <Accordion title="Client Day Rates Table" icon="table">
    The agency dashboard includes a sortable table of all clients ranked by day rate (lowest first). This helps identify which clients need attention.
  </Accordion>
</AccordionGroup>

## Worked Examples

### Example 1: Efficient Delivery

**Scenario:** You've delivered a client's work more efficiently than allocated.

| Field                 | Value                             |
| --------------------- | --------------------------------- |
| Monthly cost          | £5,000                            |
| Monthly hours         | 60 hours (3,600 mins)             |
| Billable minutes used | 2,250 mins (37.5 hours)           |
| Prorated revenue      | £5,000 × (2,250 ÷ 3,600) = £3,125 |
| Days used             | 2,250 ÷ 450 = 5 days              |
| **Actual day rate**   | **£3,125 ÷ 5 = £625/day**         |
| Sold day rate         | £625/day                          |
| **Variance**          | **£0 (0%)** ✅                     |

You're still on target even though you used fewer hours—this is **efficient delivery** creating banked time.

### Example 2: Over-Delivery

**Scenario:** You've logged more hours than allocated.

| Field                 | Value                             |
| --------------------- | --------------------------------- |
| Monthly cost          | £5,000                            |
| Monthly hours         | 60 hours (3,600 mins)             |
| Billable minutes used | 4,500 mins (75 hours)             |
| Prorated revenue      | £5,000 × (4,500 ÷ 3,600) = £6,250 |
| Days used             | 4,500 ÷ 450 = 10 days             |
| **Actual day rate**   | **£6,250 ÷ 10 = £625/day**        |
| Sold day rate         | £625/day                          |
| **Variance**          | **£0 (0%)** ✅                     |

Even with over-delivery, the day rate stays consistent because prorated revenue accounts for the extra work value delivered.

### Example 3: Over-Servicing

**Scenario:** You've logged many more hours than allocated without proportional value.

| Field                 | Value                             |
| --------------------- | --------------------------------- |
| Monthly cost          | £5,000                            |
| Monthly hours         | 60 hours (3,600 mins)             |
| Billable minutes used | 5,400 mins (90 hours)             |
| Prorated revenue      | £5,000 × (5,400 ÷ 3,600) = £7,500 |
| Days used             | 5,400 ÷ 450 = 12 days             |
| **Actual day rate**   | **£7,500 ÷ 12 = £625/day**        |
| Sold day rate         | £625/day                          |
| **Variance**          | **£0 (0%)**                       |

Wait—shouldn't this be negative? Not quite! The day rate stays at £625 **because prorated revenue scales**. However, you've delivered £7,500 worth of work for a £5,000 contract—that's over-servicing at the contract level, not the day rate level.

The key is: day rate measures efficiency **per day**, not total contract value.

## How Day Rates Are Calculated

Day rates are calculated and stored in several ways:

<Steps>
  <Step title="Daily Snapshots">
    Every night at 1 AM UTC, CharleOS captures day rates for all clients, departments, users, and the agency. These snapshots enable trend analysis and historical reporting.
  </Step>

  <Step title="Real-Time Calculations">
    When you view dashboards or client profiles, day rates are calculated in real-time based on current billable time entries and contracts.
  </Step>

  <Step title="Weighted Averages">
    Personal, department, and agency day rates use weighted averages based on billable time. Clients you've spent more time on have more influence on your average.

    Formula: `Sum(Client Day Rate × Days Worked) ÷ Sum(Days Worked)`
  </Step>
</Steps>

<Info>
  All day rates in the database are stored in **pence** (not pounds) to avoid floating-point precision issues. They're converted to pounds for display.
</Info>

## What Affects Day Rate

### Things That Improve Day Rate

* ✅ **Efficient delivery** - Completing work faster than estimated (banked time)
* ✅ **Accurate estimates** - Setting realistic expectations that you can beat
* ✅ **Clear requirements** - Reducing rework and scope creep
* ✅ **Focused work** - Minimizing context switching and distractions
* ✅ **High-value contracts** - Negotiating better rates with clients

### Things That Hurt Day Rate

* ❌ **Over-runs** - Tasks taking longer than estimated (overage)
* ❌ **Scope creep** - Doing work outside the agreed scope
* ❌ **Poor estimates** - Underestimating complexity
* ❌ **Rework** - Fixing mistakes or misunderstood requirements
* ❌ **Inefficient processes** - Manual work that could be automated

## Related Concepts

<CardGroup cols={2}>
  <Card title="Utilisation" icon="chart-line" href="/concepts/financial/utilisation">
    Day rates measure profitability per day, but utilisation shows how many of your available days are billable
  </Card>

  <Card title="Efficiency" icon="bolt" href="/concepts/financial/efficiency">
    Efficiency (banked time vs overage) directly impacts your actual day rate
  </Card>

  <Card title="Retainer Plans" icon="repeat" href="/concepts/billing/retainer-plans">
    Day rates are calculated from retainer plan monthly costs and hours
  </Card>

  <Card title="Billing Model" icon="calculator" href="/concepts/billing/billing-model">
    Understand how value-based billing affects day rate calculations
  </Card>
</CardGroup>

## Tips for Improving Day Rates

<AccordionGroup>
  <Accordion title="Review Low-Performing Clients" icon="magnifying-glass">
    Regularly check the Client Day Rates table on the agency dashboard. Focus on clients in the red or amber zones.

    Ask:

    * Are estimates consistently too low?
    * Is there scope creep happening?
    * Are processes inefficient?
    * Should we renegotiate the contract?
  </Accordion>

  <Accordion title="Track Trends Over Time" icon="chart-line">
    Day rates fluctuate month-to-month. Look at trends over 3-6 months to identify patterns rather than reacting to one bad month.
  </Accordion>

  <Accordion title="Learn from High Performers" icon="trophy">
    Look at which clients have the best day rates and why. Can those practices be applied elsewhere?
  </Accordion>

  <Accordion title="Improve Estimation" icon="ruler">
    Better estimates lead to better day rates. Review past tasks to calibrate your estimates and use [T-shirt sizing](/concepts/estimation/t-shirt-sizing) consistently.
  </Accordion>

  <Accordion title="Manage Scope Carefully" icon="border-all">
    Scope creep is a day rate killer. Make sure everyone understands what's in scope and use change requests for additional work.
  </Accordion>
</AccordionGroup>