If you’ve ever stared at a contract offer of $800 a day and wondered what that actually means as a salary, you’re not alone. Converting a day rate to an annual salary is one of the most common calculations Australian contractors make — especially when weighing a contract role against a permanent position.
The short answer: $800 a day works out to roughly $176,000 a year. Contractors use the 220-day rule — multiplying the day rate by 220 billable days rather than 365 — because weekends, public holidays, and leave days aren’t billable. That makes $500/day ≈ $110,000, $800/day ≈ $176,000, and $1,000/day ≈ $220,000 a year.
But there’s a catch: a day rate is not directly comparable to a salary. A permanent salary package includes 12% super guarantee, paid annual and sick leave, job security, and employer benefits that a contractor’s day rate must cover on its own. This guide walks through the formula, the conversion tables, and how to make a fair comparison — or use our contract day rate calculator to run your own numbers.
The 220-Day Rule: How the Formula Works
The standard formula for converting a contract day rate into an equivalent annual salary is straightforward:
Annual gross = day rate × 220
The number 220 is the widely used estimate of how many billable days a full-time contractor works in a year. It comes from subtracting every non-working day from the calendar year, like this:
| Day type | Days |
|---|---|
| Total days in a year | 365 |
| Weekend days (52 × 2) | −104 |
| Public holidays (Australia average) | −13 |
| Annual leave | −20 |
| Sick leave and admin/non-billable days | −8 |
| Estimated billable days | ≈ 220 |
This is the same logic behind the common variant you’ll hear recruiters use: day rate × 5 days × 44 weeks. Five working days times 44 working weeks (52 weeks minus roughly 8 weeks of leave, holidays, and downtime) gives 220 billable days — the same figure arrived at from the opposite direction.
A word of caution on the two inputs: day rates in Australia are typically quoted excluding GST and excluding super when the contractor operates through their own entity or company. If you’re a sole trader or operate via an ABN, your day rate needs to cover everything — super contributions, insurance, downtime, and GST reporting — on top of the headline number.
Day Rate to Salary Conversion Table
Here are the standard conversions using the 220-day rule, covering the day-rate ranges most common in Australian contract markets:
| Day rate (excl. GST/super) | × 220 billable days | Annual equivalent |
|---|---|---|
| $400/day | $400 × 220 | $88,000 |
| $500/day | $500 × 220 | $110,000 |
| $600/day | $600 × 220 | $132,000 |
| $700/day | $700 × 220 | $154,000 |
| $800/day | $800 × 220 | $176,000 |
| $900/day | $900 × 220 | $198,000 |
| $1,000/day | $1,000 × 220 | $220,000 |
| $1,200/day | $1,200 × 220 | $264,000 |
| $1,500/day | $1,500 × 220 | $330,000 |
These figures are gross contract income before expenses and super — they’re your top-line revenue, not your take-home pay. What you actually keep depends on your business structure, deductible expenses, and how you pay yourself super.
Going the Other Way: Salary to Day Rate
The formula works in reverse too. If you know your current permanent salary and want to know what day rate would earn you the same gross, divide by 220:
Day rate equivalent = annual salary ÷ 220
For example, a $100,000 salary ÷ 220 ≈ $454.55 per day. In other words, a $455/day contract rate gives you the same gross annual income as a $100,000 permanent salary — before accounting for the missing benefits.
That “before accounting for the missing benefits” part is crucial. A straight $100,000 salary versus $100,000 of contract income are not the same deal, and this is where most fair comparisons go wrong.
Why a Day Rate Is NOT the Same as a Salary
This is the section that matters most, and the one most rate calculators skip. When a permanent employee earns $100,000, their total package is worth considerably more than $100,000. A contractor on $454/day needs to self-fund everything an employer normally provides.
Here’s what sits inside a typical permanent salary package that a day rate must cover:
- Superannuation guarantee (12%): A $100,000 salary comes with $12,000 in employer super contributions, making the total package worth roughly $112,000. A contractor operating through their own company must make those contributions themselves — there’s no employer topping up their super.
- Paid annual leave: Four weeks of paid leave per year. A contractor who takes a week off bills zero for that week.
- Paid sick leave: Ten days per year for full-time permanent employees. A contractor who is sick doesn’t get paid — which is part of why the 220-day rule already assumes around 8 sick/admin days.
- Job security and continuity: Permanent roles don’t end every 3, 6, or 12 months. Contractors face gaps between engagements, time spent interviewing, and unpaid onboarding and admin.
- Employer benefits: Training budgets, professional memberships, workers’ compensation coverage, payroll tax handling, and HR infrastructure — all absorbed by the employer in a permanent role, all the contractor’s problem on a day rate.
The Fair Comparison: Add the Contractor Premium
Because of that gap, the market convention in Australia is that a contractor’s annualised day-rate income should sit roughly 20–30% above the equivalent permanent salary to be genuinely comparable. This is called the contractor premium, and it compensates for the missing super top-up, unpaid leave, insecurity, and extra costs.
In practice, the comparison works like this. Take the $100,000 salary example:
- Convert the salary to a total package: $100,000 + 12% super ≈ $112,000 total value.
- Add the contractor premium (20–30%): $112,000 × 1.20–1.30 ≈ $134,400–$145,600.
- Convert back to a day rate: $134,400 ÷ 220 ≈ $611/day; $145,600 ÷ 220 ≈ $662/day.
So while $454/day matches the gross salary of $100,000, a fair equivalent contract rate that accounts for the 12% super adjustment and the 20–30% contractor premium lands closer to $611–$662 per day. That’s a significant difference — and it’s why contractors who accept a rate that merely matches their old salary on paper often find themselves worse off.
The same logic applies in reverse. If you’re offered $800/day, don’t compare $176,000 to a $176,000 salary. Applying the premium in reverse, that contract income is more fairly comparable to a permanent salary of roughly $135,000–$147,000 — still a strong package, but not the headline $176,000.
Day Rate to Hourly Equivalent
Sometimes a client or recruiter wants to talk in hourly terms, or you need to sanity-check a rate against an hourly wage. The conversion is simple:
Hourly equivalent = day rate ÷ hours per day
For example, $800 ÷ 7.6 hours (a standard Australian full-time day) ≈ $105.26 per hour. On an 8-hour day, the same rate is $100/hour exactly.
Our salary to hourly calculator can help you work through the permanent-employee side of the comparison if you want to see what a salary translates to per hour worked.
Adjusting the 220-Day Assumption
The 220-day rule is the standard, but it’s a rule of thumb — not a law. Your actual billable days depend on your working pattern, and you should adjust the assumption to match your reality:
- Use 200–210 days if you take extended holidays, experience regular gaps between contracts, or work in industries with seasonal downtime.
- Use 220 days for the standard assumption: 4 weeks of leave, public holidays, and a small buffer for sick and admin days.
- Use up to 230 days if you rarely take leave, bill consistently year-round, and work across holiday periods.
A shift of just 10 days changes the maths meaningfully. At $800/day, 210 billable days gives $168,000 while 230 gives $184,000 — a $16,000 swing. Be honest about your downtime when choosing your number, because overestimating billable days is one of the fastest ways to underprice yourself.
Worked Example: $1,000 a Day
Let’s put it all together with a $1,000/day contract offer:
- Annualised gross: $1,000 × 220 = $220,000.
- Hourly equivalent (7.6-hour day): $1,000 ÷ 7.6 ≈ $131.58/hour.
- Fair salary comparison: Reverse the 20–30% premium → roughly a $169,000–$183,000 permanent salary.
- Package comparison: That salary plus 12% super would be a total package of roughly $189,000–$205,000 — in the ballpark of the $220,000 contract gross, which is exactly how the premium is supposed to work.
This is the calculation every contractor should run before accepting or declining a contract: not just “what does the rate annualise to,” but “what permanent salary is this genuinely equivalent to once super, leave, and risk are priced in.”
Frequently Asked Questions
How do you convert a day rate to an annual salary in Australia?
Multiply the day rate by 220 — the standard estimate of billable days per year after subtracting weekends, public holidays, annual leave, and sick/admin days. So $800/day × 220 = $176,000 a year. An equivalent shortcut is day rate × 5 days × 44 weeks.
Why 220 days and not 365?
Because you can’t bill every calendar day. Starting from 365, you lose 104 weekend days, about 13 public holidays, 20 days of annual leave, and roughly 8 sick and admin days — leaving about 220 days you can actually invoice for. Using 365 would wildly overstate your income.
What day rate equals a $100,000 salary?
A straight gross conversion gives $100,000 ÷ 220 ≈ $454.55/day. But that’s not a fair comparison: the salary includes 12% super (making the package worth ~$112,000), paid leave, and job security. Adding the standard 20–30% contractor premium, a fair equivalent contract rate is closer to $611–$662/day.
Are Australian day rates quoted with or without super and GST?
Typically both are excluded. Day rates are usually quoted excluding GST and excluding super when the contractor operates through their own entity or company. If you’re comparing a rate to a salary, remember the salary figure usually already reflects super paid on top (at the 12% guarantee rate), while your day rate must cover that cost yourself.
How do I convert a day rate to an hourly rate?
Divide the day rate by the number of hours in your working day. For example, $800 ÷ 7.6 hours ≈ $105.26/hour; on an 8-hour day the same rate is $100/hour exactly.
Should I use 220 days, or adjust it?
220 is the industry-standard starting point, but adjust it to your reality. Use 200–210 if you take long holidays or face gaps between contracts, or up to 230 if you work consistently year-round. Each 10-day shift changes an $800/day annualisation by $8,000, so be realistic about your downtime.
Conclusion
Converting a contract day rate to an annual salary starts with a simple formula — day rate × 220 billable days — which turns $800 a day into roughly $176,000 a year. But the number on the calculator is only half the story. A day rate excludes the 12% super guarantee, paid leave, and security baked into a permanent salary, which is why the market applies a 20–30% contractor premium when comparing the two.
Before you sign a contract or walk away from a permanent role, run the full comparison: annualise the rate, add the hourly equivalent, and adjust for the premium. Our contract day rate calculator does the maths for you — plug in your rate and billable days to see your annualised income instantly.