Your day rate starts with what the business needs to bring in, divided by the days you can actually charge for. Then check that starting figure against the work, your customers and your local market.

A rate copied from another tradesperson will not tell you whether your own costs are covered. Write down your assumptions so you can compare them with the year you actually have.

Work out the annual revenue target

Start with the personal income you need the business to support. If you begin with take-home pay, work back to a figure that also allows for Income Tax, National Insurance and any other personal commitments, such as student loan repayments or pension contributions.

Then add the annual business costs that your chargeable time needs to cover. Typical items include:

• van payments, 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; and

• storage, advertising, protective clothing and other running costs.

Include a realistic allowance for money you want to leave in the business, such as a reserve for replacements or quieter periods. Keep materials and other costs charged separately out of this labour-rate calculation, or make clear which ones you have included.

This is a pricing budget, not a list of tax deductions. Personal drawings are not allowable business expenses, and some assets have different tax treatment. Check HMRC’s expenses guidance when working out taxable profit.

The day-rate calculator can help you explore your figures. Read its assumptions before relying on the result, especially if you start with a take-home target. Your tax position can depend on other income and personal circumstances.

Count chargeable days honestly

A day spent working on the business is not always a day you can put on a customer’s invoice. Your rate has to cover the time you cannot charge for as well.

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

2. Allow for holidays, bank holidays you do not work and a realistic amount of sickness.

3. Take off time for training, certification and bookkeeping.

4. Allow for surveys, quotes and merchant runs where that time is not charged to a customer.

5. Use your own records to allow for seasonal gaps and other unbooked time.

Do not subtract the same day twice. For example, quoting time already included in an allowance for non-chargeable days should not be deducted again. Use last year’s diary and invoices if you have them, and keep part days consistent with the hours you sell as a full day.

There is no single correct number of chargeable days for every sole trader. A full diary for a few weeks is not enough evidence to assume a full year.

An illustrative calculation

Suppose a fictional trade business needs £66,000 a year from chargeable time and expects 180 chargeable days. Its annual target already allows for the owner’s income needs and business costs. VAT and materials charged separately are outside this example.

£66,000 ÷ 180 days = £366.67 a day.

The business might round that to £370 as a starting rate, then check what the day includes and whether customers will pay it for the work offered. At the same annual target, 160 chargeable days would require £412.50 a day; 200 would require £330.

These are illustrative assumptions, not UK market rates or a recommendation. The calculation shows why both the annual target and the number of chargeable days matter. It does not guarantee that work will be available at the resulting price.

Decide what the day includes

Explain the rate before the customer agrees to the work. Put the following in writing:

• whether the rate covers one person or a team;

• how many working hours make up a day;

• how part days, overtime and extra visits are charged;

• whether travel, parking, materials, waste and specialist equipment are included; and

• how changes to the work will be agreed.

Make the VAT position clear. If you are not VAT registered, do not add VAT. If you are registered, apply the correct treatment for the work and make the total the customer will pay clear. See HMRC’s VAT guidance.

Know when a fixed price suits the job better

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

For a fixed-price job, multiply the expected chargeable days by your day rate, then add materials and other job-specific costs not already included. Allow for the scope and risk of the work.

Do not add the same overheads twice. If your day rate already includes an allowance for van costs, insurance and other overheads, do not add those same costs again as a separate percentage. The same applies to any profit allowance already included in the annual target.

The guide to pricing a trade job for profit looks at the wider job calculation. Keep a note of what your rate covers so you can use it consistently when preparing quotes.

Check what the rate actually produced

Compare your assumptions with your records. How many days did you charge for? What did the business cost to run? How much time went into quotes, travel and work you could not bill?

Keep the amount invoiced separate from the money received when reviewing cash flow. A profitable job on paper does not pay the van bill until the customer pays.

Revisit the calculation when costs rise or the mix of work changes. Honour prices already agreed unless you and the customer agree a change, and make new prices clear in future quotes.

TradePilot lets you keep saved prices and use them when building a quote. The judgement about what to charge remains yours.

Sources

• Business Wales: costs, pricing and business planning

• HMRC: expenses if you are self-employed

• HMRC: Income Tax rates and Personal Allowances

• HMRC: self-employed National Insurance rates

• HMRC: charging and recording VAT

Written by Chris, founder of TradePilot.

This is general business information, not personalised pricing, tax or financial advice. The worked example is illustrative. Official sources checked on 16 September 2026.