How to Set Your Hourly Rate and Day Rate as a UK Tradesperson

The BuildEstimate Team · 19 July 2026 · 7 min read · More guides

Most tradespeople set their rates by asking around: what does everyone else charge? It feels sensible, but it is the wrong starting point — and it is why plenty of busy trades end the year with nothing to show for it. This UK guide walks through the right way: work out what it truly costs you to be in business, count the hours you can genuinely bill, and let those two numbers set your hourly rate and day rate.

Why "what everyone else charges" is the wrong starting point

The bloke in the next van has different costs to you. Different van payments, different insurance, different tools, different travel patch, different family to feed. His rate — even if he told you the truth about it — is built on his numbers, not yours. Copy it and one of two things happens: you charge more than you need and price yourself out for no reason, or you charge less than you need and quietly subsidise every customer you work for.

Market rates are a sanity check, not a starting point. The starting point is your own break-even number: the rate below which you are paying to go to work. You cannot know whether a rate is good until you know what yours has to be.

Step 1 — Work out your true cost base

Start by listing everything it costs you to be in business for a year — not just the obvious costs, but the ones that never appear on a job sheet:

• Van and fuel — payments or depreciation, fuel, servicing, tyres, breakdown cover.
• Insurance — public liability, tools cover, van insurance, and any professional cover your trade needs.
• Tools and equipment — replacement and repair, not just purchase. Tools wear out and walk off.
• Phone, software and subscriptions — the running costs of looking and working professional.
• Training and certifications — courses, cards, renewals and the unpaid days spent doing them.
• Accountancy and admin — your accountant, plus memberships and marketing.
• Pension — nobody auto-enrols you when you work for yourself. If it is not in your rate, it does not exist.
• Holidays and sick days — there is no holiday pay or sick pay to fall back on; every week off is a week your rate has to have already paid for.
• Dead time between jobs — gaps in the diary, cancelled starts and slow weeks are a real cost of trading.

Add it all up for the year. That figure is what the business must recover before you have earned a single pound.

Step 2 — Set your target income

Now decide what you want the business to pay you. Not "whatever is left" — a deliberate figure, before tax, that reflects the life you are working for. This is the part most tradespeople skip, which is exactly why so many end up earning less than they would on the cards for someone else, with all of the risk and none of the security.

Your rate now has a job to do: cost base + target income is the total your billable hours must bring in over the year.

Step 3 — Count your real billable hours

Here is the trap that sinks more rates than any other: a 40-hour week is not 40 billable hours. Think about where a working week actually goes — driving between jobs, doing quotes and site visits, chasing invoices, runs to the merchant, paperwork in the evening. None of it can be invoiced, and all of it comes out of the same week. Then look at the year: holidays, bank holidays, the odd sick day and the quiet weeks between jobs remove whole chunks of it.

Only the hours you can genuinely put on an invoice count. Divide your annual total by billable hours you will never actually work, and the rate that comes out will be too low — permanently.

Step 4 — A worked example: from costs to a rate

Suppose a sole trader's list from Step 1 comes to £12,000 a year, and their target income from Step 2 is £40,000. The business needs to bring in £52,000 from billable work.

Now the hours. They work a nominal 40-hour week, but travel, quoting, admin and merchant runs realistically absorb around 12 of those, leaving about 28 billable hours a week. Allowing six weeks a year for holidays, bank holidays, sickness and slow spells leaves 46 working weeks:

46 weeks × 28 hours = 1,288 billable hours — call it 1,300 to keep the sums simple

The rate falls straight out:

£52,000 ÷ 1,300 hours = £40 per hour

And the day rate follows from the hours genuinely spent on the tools in a typical day — say eight:

£40 × 8 hours = £320 per day

Notice what this number means: it is the minimum, the break-even-plus-target floor. Charge below it and the shortfall comes out of your income or your pension — nobody else's. Charge above it and you are building margin for growth, better kit and the bad months. Now, and only now, is the moment to look at the local market: not to copy it, but to decide where you can position yourself above your floor.

Day rate vs hourly rate vs fixed price

Once you know your rate, the next question is how to charge it. Each structure suits different work:

Fixed pricing rewards accuracy: the better your estimating, the more of the upside you keep. If you go that route, the method in our guide to how to estimate a construction job shows how to build the price up from cost, and how to write a construction quote covers the scope, exclusions and terms that stop a fixed price becoming an open one.

Raising rates with existing customers

Costs rise every year; a rate that never moves is a rate that quietly falls. Raising it does not need to be awkward if you handle it in the right order:

• Raise it on new quotes first. New customers have no old price to compare against — the new rate simply is the price. This is the zero-friction way to phase an increase in.
• Give existing customers notice. For repeat and ongoing customers, a short message ahead of time — "from September my rates are changing" — lands far better than a surprise on an invoice.
• Explain value, not apology. You do not need to justify a rise line by line. A sentence about rising costs and continued standards is enough. Businesses they buy from do the same thing every year.
• Accept that a few may leave. Customers who only ever wanted the cheapest price were the least profitable work in the diary. Losing a little of it while earning properly on the rest is usually a trade worth making.

Common pricing mistakes

• Copying competitors blindly — pricing from someone else's costs instead of your own.
• Forgetting holidays and downtime — dividing by hours you will never actually bill.
• Leaving out pension, training and dead time — the invisible costs that make a "good" rate a losing one.
• Never reviewing the rate — costs rise every year; a static rate is a shrinking one.
• Discounting to win everything — a full diary at below-cost rates is just a slower way to go under.
• Confusing the day rate with the working day — charging for eight hours when travel and admin mean only six went on the tools.

How BuildEstimate helps you charge properly

Knowing your rate is half the battle; getting it into a professional quote quickly is the other half. BuildEstimate is a UK-focused, AI-assisted quoting app that builds itemised estimates with materials and labour and turns them into professional quotes fast, from your phone or your desktop. Your labour lines carry the rate you have worked out here — visible, defensible and consistent on every job — instead of a number rounded down under pressure at a kitchen table.

You can use it as a web app at build-estimate.app, and it is also available on the App Store and Google Play.

Start your 7-day free trial

Prefer to see the numbers first? View pricing — it is £20/month with a 7-day free trial.

FAQ

How do I work out my day rate as a UK tradesperson?

Add up your true annual cost base — van, fuel, insurance, tools, software, training, pension, and self-funded holidays and sick days — then add the income you want to earn. Divide that total by your realistic billable hours for the year to get an hourly rate, and multiply by the hours you actually spend on the tools in a day for your day rate.

Why shouldn't I just charge what other tradespeople charge?

Because their number is built on their costs, their overheads and their diary, none of which match yours. A rate copied from someone else can lose you money on every job without you noticing. Work out your own break-even rate first, then use local market knowledge to decide where to position yourself above it.

How many billable hours are really in a working year?

Far fewer than a 40-hour week suggests. Travel, quoting, admin, supplier runs and gaps between jobs all eat unbillable time, and holidays, bank holidays and sick days remove whole weeks. Count only the hours you can genuinely invoice — for many sole traders that is a substantial reduction on the headline week, which is why rates based on 40 billable hours come out too low.

Should I charge a day rate, an hourly rate or a fixed price?

It depends on the job. Hourly suits short or unpredictable work, a day rate suits open-ended work where the scope is loose, and a fixed price suits well-defined jobs where you control the scope — it usually wins more work but puts the risk of overruns on you, so it needs a clear scope and exclusions.

How do I raise my rates without losing existing customers?

Apply the new rate to new quotes first, give existing and repeat customers notice before it affects them, and explain the value rather than apologising — costs rise, and a business that never adjusts its prices eventually cannot serve anyone. Most good customers accept a clearly communicated increase; the ones who only ever wanted the cheapest price were never profitable anyway.