How to Work Out Your Day Rate: The UK Trade's Method

↑ Part of the Pricing series · How to Price a Job and Not Lose Money

A proper day rate is built from three layers: a wage for yourself, a share of your yearly overheads, and profit on top. Work each one out from your own numbers and you get a rate you can defend in any conversation. Copy the going rate instead and you're running someone else's business out of your van.

Your day rate is the number the rest of our guide to pricing a job leans on. Work it out properly once, in ten minutes with a calculator, and it changes every quote you send after it.

Part 1Why "the going rate" is the wrong place to start

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Ask around for what your trade charges a day and you'll get a number quickly enough. What you won't get is whose number it is. The going rate is an average of other people's businesses: their van, their insurance, their costs, their appetite for work that month. None of it is yours.

Two trades can charge the same £280 a day and one of them is quietly getting poorer. The difference isn't the rate, it's what the rate has to carry. A sole trader with a paid-off van and low costs keeps most of that. The same rate carrying van finance, dearer insurance and a heavy diesel habit might not even be breaking even, and the owner won't know until the year-end figures land.

So don't start from the market. Build your rate from your own three layers, then look at the market to sanity-check the answer.

Part 2What does a day rate actually have to cover?

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• Your wage. What a day of your labour is worth. Not "whatever's left over": a real figure, decided up front.
• Your overheads. A day's share of everything it costs to be in business at all: the van, the insurance, the tools, the phone, the accountant.
• Profit. What the business itself earns, on top of paying you. This is the layer most trades never price at all.

The first two layers added together are your break-even day: charge less than that and you are paying to go to work. Profit is what turns a job into a business.

Part 3Step 1: Count the days you can actually bill

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There are 365 days in a year and you can't invoice most of them. Take out weekends and you're at 261. Take out holidays, bank holidays and the odd sick day and you're somewhere near 225. Now take out the days that vanish into quoting, paperwork, merchant runs, van trouble and the gaps between jobs, and most one-person trades land somewhere around 200 billable days a year. Plenty land lower.

Count yours honestly, because this number does quiet damage when it's wrong. Every day you overcount spreads your costs thinner than they really are, and waters down the rate.

Part 4Step 2: Add up your real yearly overheads

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Overheads are the costs that arrive whether or not you worked that day. For a typical one-person trade:

• Van: finance or lease, tax, insurance, servicing, repairs
• Fuel
• Public liability and other insurance
• Tools, replacements and consumables
• Phone, broadband, software and subscriptions
• Accountant or bookkeeper
• Training, certifications and scheme memberships

Add up a real year's worth. For our example, say it comes to £11,000. Divide by your billable days and you get your overhead day rate: £11,000 ÷ 200 days = £55 a day, just to keep the business standing still.

The classic mistake is dividing by 365 days instead. That tells you your overheads cost about £30 a day, which feels comfortable and is wrong, because the 165 days you can't bill don't pay their own share. The 200 days that earn have to carry the whole year.

Part 5Step 3: Pay yourself a proper wage

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Decide what a day of your labour is actually worth, as if you had to hire yourself. If bringing in a tradesperson of your own standard would cost £250 a day, that's the number, and it goes into every job as a cost, not as a hope.

This is the layer that stops the oldest trap in self-employment: working flat out all year and calling the leftovers your wages. Your labour is a cost of the job. Price it like one.

Part 6Step 4: Put profit on top

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Profit isn't your wage wearing a different hat. It's what the business earns for taking the risk: the fund that replaces the van, absorbs the invoice that never gets paid, covers the quiet January, and lets you grow. A business that only ever pays its owner a wage is one bad month from trouble.

A straightforward way to price it is a markup on your break-even day. 20% is a reasonable starting point; the right figure depends on your trade and how strong your order book is. What matters is that the layer exists on every job, deliberately.

Part 7The worked example: from your costs to your rate

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• Your wage: £250
• Overhead recovery: £55 (that's £11,000 ÷ 200 days)
• Break-even day: £305
• Profit at 20%: £61
• Your day rate: £366 — call it £365

That's the arithmetic an honest £365 stands on. When a customer compares you with someone at £280, you know exactly what the gap is: either their costs are genuinely lower than yours, or they haven't done this sum and their price is quietly eating them. You don't have to say any of that out loud. You just have to not panic and match it.

If you're VAT-registered, VAT goes on top when you invoice; everything above is your net figure. And you can run your own numbers through our free day rate calculator in about a minute.

Part 8Day rate or fixed price: which should you quote?

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They do different jobs. Most domestic customers want a fixed price, because certainty is what they're buying, and a clear fixed quote wins work (our quoting guide covers making that price stick). A day rate suits genuinely open-ended work, where nobody can see the full scope until it's opened up.

But here's the point most trades miss: even when you quote fixed, the day rate is the engine underneath. Days the job will take, times your rate, plus materials and their markup: that's the price. If the day rate is wrong, every fixed quote built on it is wrong too, which is why this sum comes first.

Common questionsDay rates: quick FAQ

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How many days a year can a tradesperson actually bill?

Fewer than it feels. Take out weekends, holidays, sick days and the days lost to quoting, paperwork and gaps between jobs, and most one-person trades land around 200 to 230 billable days a year. Count yours honestly; every day you overcount waters down the rate.

What counts as an overhead in a day rate?

Anything that costs money whether or not you're earning that day: van, fuel, insurance, tools, phone, software, accountant, training and certifications. If it's cash out even in a quiet week, it's overhead, and your rate has to recover it.

Should my day rate include VAT?

Work it out net. If you're VAT-registered, VAT is added on the invoice at the correct rate; if you're not, nothing is added. Keep VAT out of the sum itself so the three layers stay about what you actually keep.

What's a typical day rate for a UK tradesperson?

It genuinely varies by trade, region and what the rate has to carry, which is exactly why borrowing a number is risky. Two trades on the same rate can be making completely different money. Build yours from your own wage, overheads and profit, then compare it with your local market rather than starting there.

Is a day rate better than a fixed price?

They suit different work. A fixed price wins domestic jobs because the customer gets certainty; a day rate fits open-ended work nobody can fully scope yet. Either way, the day rate is the engine under the fixed price, so it needs to be right first.

This guide is general information for UK tradespeople, current to the best of our knowledge in 2026. Rules, rates and thresholds change, and how they apply depends on your specific circumstances. It is not tax, accounting or legal advice. Always confirm your position with HMRC, a qualified accountant or a solicitor before relying on it. TradeDraft accepts no liability for decisions made on the basis of this guide. Questions: hello@tradedraft.co.uk.

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