Day-rate math starts with real days, not the calendar
A year holds about 250 weekdays. Subtract vacation and statutory holidays, sick days, the proposals and calls that keep the pipeline alive, invoicing and administration, certification renewals, and the gaps between contracts, and a genuinely busy consultant bills far fewer days than the calendar implies. Pricing forward from a market rate hides that; pricing backward exposes it. Take what the corporation must gross, your pay, its costs and the profit you intend to retain, then divide by the days you honestly expect to bill: a consultant who needs $200,000 through the corporation across 160 billed days needs $1,250 a day, not the $800 that felt competitive.
That floor is the first number we build in a Fractional CFO engagement, and we rebuild it annually because the denominator moves. For a solo shop, utilization means days on contract versus days on the bench, and between raising the rate and raising utilization, the rate is the only lever that does not consume more of your life.
Bench time is a cash problem before it is a tax problem
Contracts end abruptly and renewals slip, so the gap gets planned while the contract is still running. Personal pay is fixed at a level the corporation can sustain through your historical gap, not at whatever the good months allow. HST collected and corporate instalments sit segregated, so a bench month never collides with a remittance. Runway is measured in months of that fixed pay covered by corporate cash plus receivables, and we re-read it as each contract enters its final weeks.
When a gap stretches into a low-income year, the tax response, cheap dividends and instalment resets, is mapped on our tax planning page. The CFO job is different: making sure the cash exists to wait out the bench instead of grabbing the next underpriced contract in a panic.
Retainer, project or day rate: every pricing model is a risk model
Consultants rarely choose a pricing model; they inherit whatever the first client offered. Each model puts scope risk, cash timing and enterprise value in a different place, and a healthy consultancy usually runs a deliberate mix:
| Model | Cash pattern | Who carries scope risk | Worth to a buyer |
|---|---|---|---|
| Day rate, time and materials | Lumpy, follows the contract | The client | Little; it walks out with you |
| Fixed-price project | Deposit plus milestones | You; overruns eat the margin | Some, if delivery is documented |
| Monthly retainer | Smooth and predictable | Shared; scope must be written | Real, if contracts survive you |
| Managed services, support | Recurring, contracted | You; price the incident load | The revenue buyers actually price |
The retainer warning deserves its own sentence: an underscoped retainer rots into unlimited support at a fixed price. Retainers need defined capacity, response tiers and an annual reprice, or they quietly become the worst day rate you have ever worked for.
The first hire changes what you sell
Subcontract before you hire. A subcontractor tests whether demand is repeatable without adding payroll that keeps running through bench months, your margin becomes the spread between the bill rate and the sub's rate, and unincorporated subs need T4A slips, a discipline worth starting on the first invoice rather than the twentieth. Hire once the spread is proven and the pipeline covers a salary through your average gap, because an employee costs money on the bench but compounds capability in a way a sub never will.
Either way the identity of the business shifts: you stop selling your own labour and start selling a margin on other people's. We model that margin, the loaded cost of the hire against the realistic billable days you can sell for them, before the offer letter goes out, not after.
Build something a buyer can price
Most one-person consultancies sell for approximately nothing, because the only asset walks out the door with the founder. Buyers who pay real money pay for contracted recurring revenue, delivery that is documented rather than remembered, a client list where no single name dominates, and people or subcontractors who stay after you leave. None of those appear in the final year; they take years to build, which is why exit design starts while a sale is still hypothetical.
The tax prize rewards the discipline: if the shares qualify at sale, the lifetime capital gains exemption can shelter up to $1.25 million of gain, and qualifying depends on the corporation staying clean of surplus passive assets in the years beforehand, work that runs through Tax Planning & Advisory long before a buyer appears. For consultants across Mississauga and the GTA the engagement itself stays simple: a monthly rhythm of numbers and one working session, with scope quoted in writing after a free 15-minute discovery call and flexed to your contract cycle.
