The guide to average daily rates for developers working in IT services companies and as freelancers

Whether you are about to hire a freelance developer or sign a contract with an IT services company for a consultant, our guide provides clarity on developer ADRs (Average Daily Rates).

To help you understand the rates proposed by your developer, here is what we will cover throughout this guide:

What is the Average Daily Rate (ADR)?

Definition

The Average Daily Rate, or simply ADR (TJM in French), is used by freelance developers as well as by IT services companies (formerly known as SSII in France).

It represents the amount the client must pay for one day of service.

Context

There is a distinction between the average daily rate and fixed-price billing, which represents a set price for a service or a whole set of deliverables.

An IT services company or a freelancer charging an ADR bills based on man-days (a unit of measure based on the provider’s work for one day), regardless of the progress of the service (whether completed or not).

It is also possible to break down the average daily rate into hours or half-days.

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ADRs in the IT sector can be quite similar, but it is normal for them to evolve depending on the type of service, the provider’s qualifications, whether they are freelance or affiliated with a company, and so on.

On the other hand, as mentioned earlier, a fixed price is the set cost for a well-defined project. There is then an agreement between both parties on specific results that will be evaluated.

It can be quite tricky to estimate a fixed price correctly because project needs can evolve along the way. Therefore, IT services companies and freelancers tend to favor the ADR model.

ADR and AHR

For a consultant affiliated with an IT services company, we generally talk about an ADR, set by the company.

Moreover, it can be useful for a freelancer wishing to position themselves correctly on the market to define an ADR, but also an Average Hourly Rate (AHR).

They may choose to bill their service based on one or the other depending on the nature of the mission.

They would then prefer to use an ADR for long-term missions that can take several weeks or months, and an AHR for short missions of a few hours during the week, for example.

Gross ADR and Net ADR

The Net ADR is simply the salary cost of the consultant or freelancer made available to the client.

The Gross ADR is the price paid by the client and includes the Net ADR plus costs related to the company structure (recruitment, accounting, project management, etc.).

How is a developer consultant’s ADR calculated in an IT services company?

IT services companies base their calculations on the Average Daily Cost (ADC) to determine the developers’ ADR. This indicator allows them to evaluate their profitability.

Simply put, the ADC represents the forecasts made regarding the expenses generated by the developer’s intervention on a given project. It therefore includes the gross salary and various social charges.

Once the ADC is determined, it will be possible to calculate an ADR that covers it and thus avoids losses.

How is a freelancer’s ADR calculated?

ADR according to desired salary

The daily rate of a freelance developer can be set according to the salary they wish to achieve.

In this view, they must take into account their legal status (sole trader, limited company, etc.) to determine their annual remuneration and add their operating costs (equipment, travel, meals, etc.).

This total corresponds to the annual cost, which they must divide by the number of working days to obtain an ADR corresponding to the desired salary.

ADR according to the market

Based on experience

There is logically a difference between a junior profile with less than two years of experience and a senior profile with more than 10 years.

A junior developer’s ADR will be significantly lower than a senior’s. Years of experience inevitably differentiate two providers, whether they are freelance or not.

But that’s not all; a full-stack developer’s ADR will be higher than the ADR of a frontend-only developer, for example. Thus, the level of expertise weighs heavily on the freelance ADR.

Furthermore, their specific experiences are decisive. A long track record with a highly sought-after technology in a specific field will drive up their ADR.

Based on the job role

In the freelance world, some sectors are in higher demand than others. Web and mobile developers, UX-UI specialists, and software developers are the most requested.

Naturally, the higher the demand, the higher the applied ADRs.

Based on the client profile

Freelancers adapt their rates slightly based on client profiles.

For example, large companies generally have pre-established salary scales that do not change, but with these structures, the freelancer benefits from security.

On the other hand, with smaller entities, it is possible to open negotiations, although rates are generally lower.

Based on the mission duration

The shorter the duration of the mission, the more a freelancer can increase their rates, especially if it is part-time.

But if they secure a long-term mission, for more than a year for example, they can lower their ADR in exchange for guaranteed visibility and security.

Estimation platforms

Developers can refer to several ADR calculation platforms to align with their peers.

Some are better known than others and more popular with freelance developers; they will allow you to get ADRs that are closer to reality.

Average ADRs for freelance developers:

Aventique: proven skills at competitive ADRs

Under the staff augmentation model, Aventique recruits various developer profiles and offers their skills and expertise to other client companies at very competitive developer ADRs.

In a sector facing a talent shortage, you will have access to a pool of skills, available without delay, mastering the technologies you need to boost your teams.

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