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, 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
Van and vehicle costs alone typically run to £4,000–£7,000 per year. Most people don’t factor that into their day rate properly, which means they’re subsidising business costs out of what they think is profit.
Step 1: Work Out Your Annual Business Costs
Start by listing everything it costs you to run your business for a year. Be thorough:
| 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 anything.
Step 2: Work Out How Many Chargeable Days You Actually Have
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 total days
- 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
Every quote you do, every hour spent driving between jobs, every rainy day you can’t work – those eat into those 220 days. Use 220 as your baseline figure.
Step 3: Work Out the Gross Profit You Need
Decide what you actually want to take home after tax. If you want £35,000 a year, work backwards. As a sole trader in 2025/26, rough figures for gross profit needed:
| 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. Always speak to an accountant for figures specific to your situation. If you’re not sure whether you need one, see our guide on whether tradespeople need an accountant.
Step 4: The Day Rate Formula
Now you have everything you need:
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 costs or not taking home what you need.
UK Average Day Rates by Trade (2025/26)
Average day rates vary significantly by trade and region:
| Trade | Average UK Rate | 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. Rural rates are more variable depending on local competition and demand.
Materials Markup: Don’t Miss This
Your day rate covers labour. Materials are separate, and you should be applying a markup – the standard range is 10–20% on top of your trade price to cover sourcing time, credit risk, and the admin involved. If you’re not marking up materials, you’re doing free logistics work on every job. Always itemise materials separately in quotes and apply your markup consistently.
Track Your Numbers to Make Sure the Formula Works
Working out your day rate is the start – 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 year end. For more on managing the financial side, read our guide on how to manage cash flow as a tradesperson.
Try Tradify Free for 14 DaysThe 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 – your costs won’t stay the same and neither should your rates.
Frequently Asked Questions
Calculate: (annual business costs + gross profit needed to hit your take-home target) ÷ chargeable working days. Annual business costs include van, insurance, fuel, tools, phone, and accountant fees – typically £6,000–£15,000 for a sole trader. Chargeable days are realistically around 220 per year once you remove weekends, bank holidays, holidays, and downtime. Add your desired take-home (converted to gross profit needed to cover tax and NI), divide by 220, and you have your minimum day rate. Anything below that and you’re either under-covering costs or under-paying yourself.
A realistic figure for a sole trader working full time is around 220–225 chargeable days. Starting from 365 days: subtract 104 weekend days, 8 bank holidays, 20 days holiday, and 5–10 days for sickness, training, and admin. That leaves roughly 220 days. Every job site travel day, quote visit, and quiet period also eats into this, so 220 is already a generous estimate for most sole traders.
UK average day rates in 2025/26: electricians £200–£300 nationally (£280–£400 in London); plumbers £200–£280 nationally (£270–£380 in London); builders £180–£250 nationally; carpenters £180–£250 nationally; painters and decorators £150–£220 nationally. However, “a good day rate” is one that covers your actual costs and achieves your target take-home. Use the formula to calculate your minimum before benchmarking against averages.
No. Materials should be quoted and invoiced separately from your labour day rate, with a markup of 10–20% on top of your trade price. This markup covers the time spent sourcing and ordering materials, credit risk, and admin. If you bundle materials into your day rate, you lose visibility over your actual labour margin and end up doing free logistics work on every job. Always itemise labour and materials separately in your quotes.
At minimum, once a year – ideally at the start of each new financial year or calendar year. Review when: your van, insurance, or tool costs increase significantly; you have to pay more tax than expected; you get a large proportion of quotes accepted without negotiation (a sign you may be undercharging); or your take-home isn’t meeting your expectations. Most tradespeople who reviewed their rate properly after doing the cost calculation found they needed to increase it. The formula removes the guesswork.
A day rate charges the customer for your time spent on site. A fixed price is a set amount for the whole job regardless of how long it takes. Fixed pricing protects your margin on jobs you can complete efficiently, rewards your skill and speed, and sets clear customer expectations – most customers prefer knowing the total upfront. Day rates are better for open-ended work where scope is genuinely uncertain. Many experienced tradespeople move towards fixed pricing for most jobs and keep day rates for reactive and emergency work.
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