How to Work Out Your Day Rate as a Tradesperson
Most tradespeople set their day rate by looking at what the person down the road charges and going similar. The problem with that approach is that the person down the road might be undercharging too — and now you're both working harder than you need to for less than you deserve.
Your day rate shouldn't be based on what competitors charge. It should be based on what it actually costs you to run your business, what you want to take home, and what the market will bear. Here's how to work it out properly.
Why Most Tradespeople Are Undercharging
The biggest mistake tradespeople make when setting a day rate is only thinking about labour. They forget — or underestimate — the true cost of being self-employed.
As a sole trader or self-employed tradesperson, your day rate has to cover everything:
- Your take-home pay
- Income tax and National Insurance
- Van finance, insurance, fuel and maintenance
- Tools, equipment and replacements
- Public liability insurance
- Phone, software subscriptions and admin costs
- Unpaid days — holidays, bank holidays, sickness, quiet periods
- Pension contributions if you're making them
Van and vehicle costs alone typically run to £4,000–£7,000 per year for a self-employed tradesperson. Most people don't factor that into their day rate properly — which means they're subsidising their business costs out of what they think is their profit.
Step 1 — Work Out Your Annual Costs
Start by listing everything it costs you to run your business for a year. Be thorough — include everything you spend money on to operate:
| Cost | Typical Annual Amount |
|---|---|
| Van finance / depreciation | £2,000 – £5,000 |
| Van insurance | £800 – £2,000 |
| Fuel | £2,000 – £4,000 |
| Tools and equipment | £500 – £2,000 |
| Public liability insurance | £150 – £500 |
| Phone and software | £300 – £800 |
| Accountant fees | £300 – £800 |
| Workwear and PPE | £200 – £500 |
| Typical total | £6,000 – £15,000+ |
Add up your actual figures. This is the minimum your business needs to generate before you've paid yourself a single penny.
Step 2 — Work Out How Many Chargeable Days You Actually Have
This is where a lot of tradespeople get it wrong. There are 365 days in a year but you're not working all of them — and you're certainly not charging for all of them.
A realistic breakdown for a sole trader working full time:
- 365 days total
- Minus 104 weekend days = 261 weekdays
- Minus 8 bank holidays = 253 days
- Minus 20 days holiday = 233 days
- Minus 5–10 days sickness, training, and admin = approximately 220–225 chargeable days
That's your realistic working year. Every quote you do, every hour spent driving between jobs, every rainy day you can't work — those are eating into those 220 days. Use 220 as your baseline figure.
Step 3 — Add Your Desired Take-Home Pay
Decide what you actually want to take home after tax. Be realistic but don't sell yourself short. If you want £35,000 a year after tax, work backwards from there.
As a sole trader in 2025/26, a rough guide to gross profit needed for common take-home targets:
| Desired Take-Home | Approximate Gross Profit Needed |
|---|---|
| £25,000 | ~£32,000 |
| £35,000 | ~£46,000 |
| £45,000 | ~£60,000 |
| £55,000 | ~£76,000 |
These are approximate figures based on standard sole trader tax rates. Always speak to an accountant for figures specific to your situation. If you're not sure whether you need one, see our guide on do you need an accountant as a tradesperson.
Step 4 — The Day Rate Formula
Now you have everything you need to calculate your minimum day rate:
(Annual business costs + Gross profit needed) ÷ Chargeable days = Minimum day rate
For example — a plumber wanting £35,000 take-home with £10,000 in annual business costs:
- Annual business costs: £10,000
- Gross profit needed for £35k take-home: £46,000
- Total needed: £56,000
- Divided by 220 chargeable days = £255 per day minimum
That's your floor — the minimum you need to charge to hit your target. Anything below that and you're either not covering your costs or not taking home what you need.
How Does That Compare to UK Averages?
Average day rates for UK tradespeople in 2025/26 vary significantly by trade and region:
| Trade | Average Day Rate UK | London Rate |
|---|---|---|
| Electrician | £200 – £300 | £280 – £400 |
| Plumber | £200 – £280 | £270 – £380 |
| General Builder | £180 – £250 | £250 – £350 |
| Carpenter / Joiner | £180 – £250 | £240 – £340 |
| Painter / Decorator | £150 – £220 | £200 – £300 |
Scottish rates tend to sit slightly below London but above the national average in cities like Glasgow and Edinburgh. If you're working in a rural area, local demand and competition will also affect what the market will bear.
Materials Markup — Don't Forget This
Your day rate covers your labour. Materials are separate — and you should be applying a markup to them. The standard range is 10–20% on top of your trade price to cover sourcing time, credit risk, and the admin involved in ordering and managing materials.
If you're not marking up materials, you're doing free logistics work on every job. Always itemise materials separately in your quotes and apply your markup consistently.
Keep Track of Your Numbers
Working out your day rate is the start — but it only works if you're actually tracking what each job costs versus what you charged. A job management app like Tradify lets you log time and materials against every job so you can see your actual margin in real time rather than guessing at the end of the year.
If you want to understand your finances better as a tradesperson, our guide on how to manage cash flow as a tradesperson is a good next read.
Try Tradify Free — Use Code PARTNER for 50% OffThe Bottom Line
Your day rate isn't a number you pick based on what feels reasonable or what a competitor charges. It's a calculation — costs in, income target out, divided by the days you can actually charge for.
Do the maths once properly and you'll know exactly where you stand. Then review it every year because your costs won't stay the same and neither should your rates.
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