How to work out your day rate
Most tradespeople set their day rate the same way: they find out what everyone else round here charges, and charge that, maybe a bit less to be safe. Then they work six days a week and wonder why there's nothing in the account at the end of the month.
Your day rate isn't a market price you discover. It's a number you calculate from what you need to earn and how many days you can actually sell. Here's the sum. Every figure is indicative — use your own.
The mistake: 260 working days
There are about 260 weekdays in a year. You will not bill 260 of them. Not close.
Knock off:
| Off the calendar | Days |
|---|---|
| Weekdays in the year | ~260 |
| Holiday you actually take | 20–25 |
| Bank holidays | ~8 |
| Sick days, family stuff, van in the garage | 5–10 |
| Quoting, pricing, buying, chasing money, paperwork | 25–40 |
| Gaps between jobs — the days nobody booked | 15–30 |
That lands most one-person trades somewhere around 170–200 genuinely billable days a year, and plenty of people are below that. If you've been dividing your target income by 250, every day rate you've quoted has been roughly 25% short.
Count your own. Look back through last year's invoices and count the days you actually charged for. It's usually a sobering number and it's the most useful thing in this article.
The sum, in five steps
Step 1: What do you need to take home?
Not what you'd like — what the household needs, after tax. Mortgage or rent, bills, food, car, the kids, a holiday, something going into savings. Be honest, and add the thing you always forget: a pension. Nobody is paying into one for you.
Step 2: Gross it up for tax and NI
You get taxed on profit, so the money you take home is not the money the business earns. Depending on your profit level and structure, a rough working assumption is that you need to earn meaningfully more than your take-home target to land on it — a common planning rule is to add somewhere around 25–30% on top, then check it against your actual position with an accountant. Getting this wrong is exactly how people end up with a January tax bill they can't pay; how much to set aside for tax goes into it properly.
Step 3: Add the cost of being a trade
These are the costs you'd have even if you didn't turn a wheel:
- Van — finance or depreciation, insurance, road tax, MOT, servicing, tyres
- Fuel — a real annual figure, not a guess
- Tools — replacement, repair, calibration, the ones that walk
- Insurance — public liability, tools, van, professional indemnity if you design anything
- Registrations and schemes — Gas Safe, NICEIC/NAPIT, trade body memberships, competent-person scheme fees
- Training and tickets — renewals, CPC, asbestos awareness, first aid
- Phone, broadband, software, website
- Accountant
- Workwear and PPE
- Storage or unit rent, if you have one
- Marketing — directory fees, van signage, leaflets, Google
Add it up for a full year. For a one-van trade this is routinely five figures, and most people are shocked the first time they total it properly.
Step 4: Divide by your real billable days
Day rate = (grossed-up income + annual overheads) ÷ real billable days
That's your floor — the number below which you're going backwards.
Step 5: Add margin
The floor is survival, not a business. On top you want margin for: growth (a second van, a labourer, better tools), the bad year, and profit — the actual reward for carrying the risk. Add something meaningful, not a token.
A worked example
Indicative numbers, one-person trade:
| Line | Amount |
|---|---|
| Take-home needed | £36,000 |
| Grossed up for tax and NI (+28%) | £46,000 |
| Annual overheads (van, insurance, tools, tickets, phone, accountant, marketing) | £14,000 |
| Total the business must earn | £60,000 |
| Real billable days | 185 |
| Floor day rate | £324 |
| Plus margin (15%) | £373 |
Round it, sanity-check it against the local market, and that's your rate. Notice what happened: someone wanting £36k take-home needs to be charging north of £350 a day, not the £250 they'd probably have guessed.
If that number is well above what the local market pays, that's real information — not a reason to work for less. It means you need to change something: lower overheads, more billable days, or a different mix of work. Charging under your floor doesn't fix any of those; it just delays finding out.
Day rate is not the same as your price
Your day rate is an internal tool. It's how you convert estimated days into a number. It is not necessarily what you show the customer.
For most domestic work you should be quoting a fixed price for the job, calculated from days × rate, because that's what customers want to buy and because the efficiency gain when a job goes well is yours to keep. There's a full breakdown of when each works in day rate vs price work.
Where you do quote a day rate directly — subbie work, ongoing maintenance, snagging — remember it should usually be higher than the effective rate inside a fixed price, because on day work the customer carries none of the risk and you carry all the uncertainty about how long they'll keep you.
Things that quietly wreck the rate
Half days. A half day usually costs you a full day, because nobody books the other half. Have a half-day rate that's clearly more than half.
Travel. If you're driving 90 minutes each way, that job is not a full billable day. Either band your rate by distance or shrink your radius.
Free quoting. Twenty quotes a month at an hour each, including the drive, is a working week gone. Either build it into the rate or start charging for site visits on the ones that deserve it.
Materials at cost. If you buy materials and bill them at exactly what you paid, you've done the merchant runs, carried the cash and taken the warranty risk for nothing. A 10–20% markup is standard.
Not putting it up. Costs went up. Your rate should have too. Which brings us to:
Putting your rate up
Nobody enjoys it. The mechanics that make it painless:
- Apply it to new quotes only. Never to work you've already priced.
- Don't announce it. There's no letter to write. The next quote just has the new number on it.
- Expect to lose the bottom. If you raise your rate and lose nobody, you were too cheap by more than you raised it. Losing the most price-sensitive customers is the point — they're the ones who haggle, pay late and leave the reviews.
- Raise it on the next quote, not this one. Don't reprice a job mid-conversation.
A useful gut check: if you finish jobs feeling relieved rather than fairly paid, your rate is too low. Put it up.
Do this once a year
Book an hour every January. Recount your billable days from last year's invoices, re-total your overheads (they've gone up), and redo the sum. Ten minutes of arithmetic protects twelve months of work.
Knowing your rate is half of it — getting it into a quote before the customer rings someone else is the other half. QuoteSnap takes a spoken description of the job, applies your labour and materials, and sends a branded, itemised quote in about a minute. Try it free for 14 days.