How to work out your day rate as a tradesperson

A day rate should come from your business, not a number heard at the merchant. Work out the annual revenue the business needs, then divide it by the days you can genuinely charge to customers. The result gives you a starting point that can be tested against your work and local market.

Work out the annual revenue target

Start with the personal income you want the business to support. Add the Income Tax, National Insurance and any student loan or pension contribution that needs to be funded. Then add annual business costs.

Common costs include:

• van finance, fuel, servicing and insurance;

• tools, testing equipment and replacements;

• public liability and other business insurance;

• phone, software and accountancy;

• training, certification and trade-body fees;

• storage, waste disposal and advertising; and

• protective clothing and other allowable running costs.

If you start with a desired take-home amount, the tax calculation needs to be grossed up. Use the day-rate calculator with your figures rather than adding a guessed tax percentage.

Count chargeable days honestly

A working day is not always a chargeable day. Holidays, illness, bank holidays, quoting, buying materials, bookkeeping and gaps between jobs all reduce the days that can carry an invoice.

Build the number from your diary:

1. Start with the days you plan to work in the year.

2. Remove holidays and a realistic allowance for sickness.

3. Remove days spent on training, certification and business admin.

4. Remove the time normally used for surveys, quotes and merchant runs if customers are not charged for it.

5. Allow for seasonal gaps or other non-billable time that your own records show.

There is no correct number of chargeable days for all sole traders. Use last year's diary and invoices if they are available.

An illustrative calculation

Suppose a fictional trade business needs £66,000 of annual revenue before materials charged separately. It expects 180 chargeable days.

£66,000 divided by 180 is £366.67. The business might use £370 as the starting day rate, then test whether that covers the work involved and how materials, travel or specialist equipment will be charged.

This is not a market rate or a recommendation. Change the annual target or the chargeable days and the answer changes.

Decide what the day includes

Tell the customer whether the rate covers one person or a team, how many hours make up a day, and whether travel, parking, materials or waste are extra. State how part days and overtime are treated.

If you are VAT registered, make clear whether VAT is included. If you are not VAT registered, do not add VAT.

Know when a fixed price suits the job better

A day rate works when the scope is uncertain or the customer is buying time. A fixed price can suit defined work because both sides know the agreed total. It also puts more risk on the person who priced the job.

Use your day rate as one input to the fixed price, then add materials, direct costs, overheads and profit. The guide to pricing a trade job for profit shows that calculation.

Check what the rate actually produced

Review the rate with real records. Compare chargeable days, annual costs, profit and unpaid time with the assumptions used. A full diary does not prove the rate is adequate if each day contributes too little towards overheads.

Recalculate after a material rise in fuel, insurance, wages or other costs, or when the mix of work changes. Quote existing commitments as agreed, then apply a new rate consistently to future work.

In brief

Set a day rate from the revenue the business needs and the days customers can actually be charged. Write down what it includes, use it consistently and compare the result with the year you really had.

Sources

• HMRC: expenses if you are self-employed

• HMRC: Income Tax rates and Personal Allowances

• HMRC: self-employed National Insurance rates

Written by Chris, founder of TradePilot. This is general business information, not pricing, tax or financial advice. The worked example is illustrative. Last reviewed 10 September 2026.