A day rate quietly caps what you earn and hides whether you’re actually making money. The jobs that pay are the ones you’ve priced from the ground up: materials, the hours you can genuinely bill, the overheads no single job pays for, and a margin that’s still there after the taxman. Here’s how to build that number — and the figure most trades get wrong. (A clear, fast quote wins more work than a cheap one — but only if the number underneath it is right.)
Why the day rate works against you
A day rate rewards being slow and punishes being good. Get quicker or smarter and you earn less for the same job — and you invite the “well, how many days, then?” haggle. A fixed price for a defined job does the opposite: it captures your efficiency and moves the conversation from “how long?” to “is this worth it?”. Price the job, and skill pays.
Build the price up, don’t pluck it
A sound quote is four layers: materials, labour, overhead, and margin.
1. Materials — at the right price, with a markup
You charge more than you paid, and that’s not cheek: you collect them, carry the wastage, and stand behind the warranty. A markup of, say, 20% covers that. And materials don’t sit still — building materials rose 3.2% in the year to April 2026 (Department for Business & Trade), so a price list from last year is quietly under-recovering today.
2. The hours you can actually bill — the number most people get wrong
This is the one that sinks people. A “full-time” year looks like roughly 1,900 hours — 48 weeks at 40. You will not invoice anywhere near that. Strip out holiday, the odd sick day, quoting and chasing payment, travelling between jobs, van upkeep and admin, the wet day a job fell through — and the hours you can actually put on an invoice might be closer to 1,100. Set your rate as if every hour is billable and you undercharge on every single job. Price off the hours you can bill, not the hours you work.
3. The overhead no single job pays for
Van, fuel, insurance (public liability and your tools), phone, software, the accountant, replacing kit, your pension — plus all that non-billable time above. None of it belongs to any one job, so it has to be spread across all your billable hours. Total it for the year (it’s bigger than you’d guess) and divide by those realistic billable hours.
4. A margin that survives tax
Here’s the trap: a margin that ignores tax isn’t a margin. Profit you draw in the basic band is hit by 20% income tax plus 6% Class 4 National Insurance — 26% gone (HMRC, 2026/27). So £1 of “profit” is about 74p in your pocket. Set your margin on top of wage and overhead, and size it knowing roughly a quarter of it leaves again.
A worked example
Put it together — these figures are illustrative, so use your own:
- Target wage of £36,000 plus annual overhead of £18,000 = £54,000 to recover.
- Over about 1,100 realistic billable hours, that’s roughly £49 an hour.
- Add a 15% business margin → about £56 an hour.
- A two-day job: 16 hours × £56 = £896 labour, plus £480 of materials at a 20% markup = £576. Fixed price ≈ £1,475.
Now the day-rate version of the same job: £220 a day × 2 = £440 labour, plus materials passed on at cost (£480) = £920. Same work, same two days — and you’ve left over £550 on the table and recovered none of your overhead or margin. Repeat that across a year and it’s the difference between a business and a busy hobby.
Why fixed price protects you
A fixed price also guards your cash flow — the thing that quietly kills small firms. Late payment alone closes around 38 UK businesses every day and costs the economy roughly £11 billion a year (government figures, 2026). A price built with a real margin is what gives you the cushion to ride out a slow-paying customer instead of being sunk by one.
The takeaway
Work out your true cost per billable hour once — wage plus overhead, divided by the hours you can honestly invoice — add a margin that survives tax, and quote the whole job at a fixed price. You’ll quote with more confidence, win the work worth having, and actually keep what you charge.