Ask ten tradespeople how they set their rate and most will say some version of “it’s about what everyone round here charges.” That’s how you end up working flat out and still wondering where the money went. Copying the going rate tells you what other people charge — not what you need to charge to actually make a living after all your costs are paid.

Here’s how to work it out properly. It takes twenty minutes and it’s the most valuable twenty minutes you’ll spend on your business this year.

Why the “divide my salary by working days” method fails

The classic mistake: you decide you want to take home, say, £50,000 a year, there are about 260 weekdays, so £50,000 ÷ 260 ≈ £192 a day. Sounds reasonable. It’s also completely wrong, for two reasons:

It ignores your overheads. The van, fuel, insurance, tools, phone, accountant, materials wastage, pension — none of that is in the number. Those costs come out before you pay yourself.
You don’t work 260 days. After holiday, illness, quoting, admin, chasing invoices, bad weather and the gaps between jobs, most self-employed trades actually bill far fewer days than they think.

Fix both and you get a rate that holds up.

The four numbers you need

1. What you want to earn (your wage)

Start with the honest figure you want to take home for a year’s work. This is your money — not the business’s costs. Be realistic but don’t undersell yourself; you’re skilled and self-employed, and that carries risk that deserves paying for.

2. Your annual overheads

Add up everything it costs to run the business for a year, whether or not you’re on a job that day:

Van (finance or depreciation), fuel, tax, servicing
Public liability and other insurance
Tools, PPE, consumables, replacements
Phone, software, website, advertising
Accountant / bookkeeping
Pension contributions
Any workshop, storage or premises costs

These are real. Every one of them has to be covered by the work you bill.

3. Your billable days

Here’s the number most people get wrong. Start from ~260 weekdays and subtract the reality:

Holiday (say 5 weeks incl. bank holidays) — about 25 days
Illness / days off with no cover — a realistic handful
Quoting, admin, invoicing, buying materials, van time — this quietly eats 1–2 days most weeks
Weather, cancellations, gaps between jobs

Add that up and a lot of full-time trades realistically bill somewhere around 200 days a year, not 260. Use your honest number — track it for a month if you’re not sure.

4. Your profit margin

Profit is not the same as your wage. Your wage pays you for the work; profit is what the business keeps to grow, absorb a bad month, or reward the risk of running it. Build it in deliberately — a margin on top of everything above — rather than hoping something’s left over. If nothing’s ever left over, you own a job, not a business.

Putting it together

The formula is simply:

Day rate = ( your wage + annual overheads ) ÷ billable days,  then + profit margin

A worked example — your numbers will differ, this is just to show the method:

Desired wage                        £45,000
Annual overheads                    £15,000
                                    -------
Total to cover                      £60,000

Billable days                       ÷ 200
                                    -------
Break-even day rate                 £300 / day
Add 15% margin                      + £45
                                    -------
Target day rate                     £345 / day

Notice what happened: the “divide salary by 260” method gave £192. The honest method gave £345 for the same take-home. That gap — nearly double — is exactly the money that quietly disappears when trades price on gut feel.

Pricing jobs, not just days

Once you know your day rate, you’ve got a foundation — but you don’t have to quote by the day. In fact, fixed-price quoting usually wins more work and pays you better:

Customers prefer a firm price to an open-ended day rate.
If you’re good and fast, a fixed price rewards your efficiency — an hourly rate punishes it.
It’s easier to present professionally and harder to haggle down when it’s itemised.

Use your day rate to work out what a job should cost (days of labour × rate + materials + margin), then present it as a clean fixed quote.

Three mistakes to stop making

Forgetting materials wastage and delivery. Add a realistic buffer; you rarely use exactly what you bought.
Not reviewing your rate. Costs rise every year. Revisit these numbers annually — at least — or you’re slowly giving yourself a pay cut.
Competing on price alone. There’s always someone cheaper. Win on speed, professionalism and trust instead — that’s what actually loses and wins quotes.

The takeaway

Your rate should start from your costs and your honest billable days, not the bloke down the road. Do the sum once, build in real profit, and price jobs from a number you can stand behind — instead of the one that leaves you busy, tired and broke.

Queezy helps you turn that rate into fast, itemised, professional quotes on-site. Join the waiting list to be first in when we launch.

How to Work Out Your Day Rate as a Tradesperson