Day rate calculator

Work out the day rate your year needs. Put in the income you need from the business, the costs you will meet, and the days you will actually bill. The calculator shows the rate, the annual total it produces, and how it breaks down.

The page also shows the sum in words so it is useful without the calculator.

How to work it out

Start with what you need the business to leave you for the year. That is pay, tax and National Insurance, pension, and the profit you want to keep. Call that target income.

Subtract the costs the business will meet even when you bill. Insurance, phone, van, tools, software, accountant, CITB, trade body, waste, workwear. Not materials for a job. Overheads.

Divide what is left by the days you actually bill. That is the rate the year needs.

In symbols: day rate equals target income minus costs, divided by billable days.

Example. Target income £50,000. Costs £8,000. Billable days 200.

Left to earn is £42,000. Divided by 200. Day rate is £210.

What goes in each box

Target income is not turnover. It is what you want the year to leave you in a reasonable sense, before you decide how to take it. If you need £60,000 to live, save and pay tax, put £60,000.

Costs is what the business pays in a year that are not for one job. The van lease, insurance, YellowTradie, fuel, phone, workwear, tools replaced. A realistic total from last year is better than a guess for next. If you lease a van, put the lease. If the van is owned and you want mileage allowance, leave that out here and claim mileage through your books rather than twice.

Billable days is the one that catches people out. It is days a customer pays for. It is not days you wake up and work. A usual full time year is about 250 weekdays less bank holidays and holidays. From that, take out days lost to quoting, training, sickness, weather, waiting for materials, and gaps. Many solo trades bill for 180 to 220 days. Some bill for fewer.

Common amounts

| Target less costs | Billable days | Day rate | | --- | --- | --- | | £30,000 | 180 | £166.67 | | £35,000 | 180 | £194.44 | | £40,000 | 200 | £200.00 | | £42,000 | 200 | £210.00 | | £50,000 | 200 | £250.00 | | £50,000 | 180 | £277.78 | | £60,000 | 220 | £272.73 |

If you have a junior or take a week off sick, the days figure moves. The rate moves with it. That is why the rate is per billed day, not per calendar day.

How to count billable days honestly

Start with weekdays in the year. Subtract 8 bank holidays and the holidays you intend to take. Subtract days you will spend on quotes and admin where no customer pays. Subtract likely days lost to weather and sickness. The result is closer to the days a customer will actually be billed for than your first guess.

If you quote fixed price jobs rather than daywork, count how many day equivalents each quote produced in reality, not the days you hoped it would. Fixed price hides the days. Days still matter for pricing.

Using the rate on a quote

A day rate of £210 for a two day job is £420. Add materials with a markup if you supply them. Add a line for paperwork and travel. For a full price, see what to charge.

Do not drop the rate on site. If the job grows, the price for extra days should be at the rate you came with.

Pitfalls

Forgetting overheads is the first. Insurance, phone and van sit in costs whether you charge for them on the quote or not.

Counting every weekday as billable is the second. You do not bill every weekday. Using the days above keeps the rate honest and saves undercharging.

Cutting the rate to win is the third. A rate of £50 less a day across 200 billable days leaves £10,000 out of the year. That is not a small gift.

Questions

Is day rate the same as pay per day?

No. Day rate is what the business must charge to meet the income you targeted and the costs above it. What you take home after tax and after profit is a separate question. This page does not calculate tax. It calculates the rate that funds your plan. Your accountant can set what to draw.

What if I charge by the job, not by the day?

Still work out the day rate. Then price the job in day equivalents plus materials. A three day kitchen refit at £280 a day is £840 of labour before materials. If the customer asks for a fixed price of £900 for the same scope, you still know what the days were worth.

Do materials go in costs here?

No. Materials are priced on the job, not in the annual overheads for this sum. Put materials on the quote that uses the rate, not in the pot you divide here. Otherwise you count them twice.

What if I bill four days a week and keep one for quotes?

Then billable days come down. If you work 48 weeks and bill four days, that is 192. Put 192. The calculator will raise the rate to meet the same target.

Sources

This calculator uses your own figures. It has no HMRC rate in it. When you apply VAT to a quote built from this rate, use the rates shown on the VAT calculator.

Join the list

The app is not in the shops yet. Join the list and we will tell you the day it opens.