This article is part of our Pricing & Profit guide for tradesmen, which explains how to charge properly and run a profitable trade business.
Introduction
One of the hardest parts of being a tradesman isn’t the work — it’s deciding what to charge. Quote too high and you lose the job. Quote too low and you’re working for nothing. Many tradesmen stay busy all year but still struggle financially because their day rate simply doesn’t cover their real costs.
Most tradesmen have experienced quoting a job only to hear that a competitor was 30% cheaper. This leaves you wondering how do others do it for less. This in turn throws doubt over what you are charging versus what you need to ensure a profit. This questions a business’s whole philosophy towards their pricing structure.
Breakdown with numbers
Let’s break it down. Firstly, you can’t worry about others. If a competitor wants to lose money on a job, let them. What you don’t want to be is a busy fool. You need a base line pricing structure that works for you and your business, and this needs to be stuck to. Buying work only leads to losses that renders the hard work pointless, over pricing means you miss out on valuable work. The hourly rate is the key, I say this because you should be procuring materials as cheaply as possible, bigger companies will have better buying power however their overhead and in turn their hourly rate will be higher. The mark up on materials is averagely based between 10%-20%, but this depends on the trade you’re in and the materials you’re buying. For example, a electrician supplying a consumer unit at £250 with £10% added only yields £25, is that enough if when you get to site its damaged and must go back? On the other hand a gas engineer installing a boiler that’s worth £1500 has £150 to play with. Rule of thumb the lower the material value the higher the percentage needs to be. Be careful though, some customers do, do a ‘google’ search on materials to check the prices, however, don’t fall in the trap of buying cheap online because of customer pressure. Always use a reputable wholesaler.
Hourly Rate
The hourly rate needs to be set to cover several things but ultimately needs to cover all the overhead. For a sole trader it needs to cover –
- The wage of the individual
- Van and fuel (unless fuel added into job)
- Phone/Ipad/IT
- Training
- Accreditation
- Office/Storage space
- Tools
- Uniform
- Accountancy fees
And the list goes on!
Practical example
Let’s do a practical example and put some monthly costs to list above
• The wage of the individual – £20 p/h x 40 hours x 4.3 (weeks in a month) = £3440
• Van and fuel (unless fuel added into job) = £600
• Phone/Ipad/IT/systems subscription = £150
• Training = £50
• Accreditation = £25
• Office/Storage space = £250
• Tools = £70
• Uniform = £30
• Accountancy fees £40
This totals = £4655
If we divide this figure by the monthly hours of 172 we get a hourly rate of £27. We also need to consider if its practical to work a solid 172 hours a month for 12 months, we will get sick, we need holidays. Let’s say we have 4 weeks holiday a year plus bank holidays (8 days in England, 9 in Scotland, 10 in NI). Let’s say an additional 2 weeks for bank holidays. We now have to divide our 6 weeks by 12 months leaving ½ a day a week or 20 hours and add this to the hourly rate. So £20p/h x 20 hours = £400. Add £400 to the £4655 and divide again by £172 this now equals £29, round up to £30 to cover a bit of illness.
This is only a working example and the costs need to be put in for your business. However this demonstrates that anything less than £30 isn’t sustainable and more likely needs to be £35 to make some profit. Once you’ve decided on a rate, it must be stuck to or raised. This does also rely on good continuity of work.
To sum up. The £20 hourly wage represents the personal income required. Once overheads, holidays, and downtime are added, the true chargeable rate rises closer to £30–£35 per hour.
As day rate £30 equates to £240 for 8 hours and £35 equates to £280 for 8 hours.
Don’t forget you will need pay Tax and National Insurance on what is paid personally. Make sure you are happy with the wage value.
This calculation shows the minimum hourly rate required to cover basic costs. However, it doesn’t yet include full business considerations such as downtime between jobs, tax planning, and long-term profit. When these are included, the true day rate required is often significantly higher.
Typical Tradesman Day Rates in the UK
Below is a example of common day rates across the UK in 2026
Electrician: £250–£350/day
Plumber: £200–£350/day
Carpenter: £200–£300/day
General builder: £180–£300/day
The variation in values across the trades is not that one is more skilled than the other, more to do with accreditation/qualifications and certification. An electrician as a example, may need to be accredited to a governing body like the NICEIC or NAPIT. These body’s cost money and time. An electrical certificate needs to be produced for each job which cost time and money all of which needs building into the rate. A common problem for electricians is a test form can take a hour to do and often gets done once they have left site. The customer doesn’t see this time and can be reluctant to pay for it. With modern technology such as tablets, it pays to do the certification whilst onsite meaning its easier to bill.
Common mistakes
- Not considering or allowing all the little expenditures
- Forgetting to allow for holidays and sickness within the rate
- Worrying about competitors rates
- Buying work by setting hourly rate too low
Clear summary
- Make sure you include all your overhead costs into the hourly rate
- Have a clear vision how many hours you need, the hourly rate is useless without billable hours
- Don’t under value yourself, charge what you need to make profit
- Consider the percentage mark up on materials. Don’t be afraid to change this on a job per job basis.
- Market research is good, knowing what your competitors charge is good, but don’t get sucked into matching them if you can’t afford it.
- Use the day rate. If you do multiple jobs in a day target the day rate total. This gives scope to move your costs slightly if required.
The biggest mistake tradesmen make isn’t lack of work — it’s charging too little for the work they do.
If your rates don’t cover your real costs, every job slowly drains your business.
Work out your true hourly cost, convert it to a day rate, and stick to it. The right customers will always pay for good trades.
Useful Links
Calculate Your Day Ratehttps://financefortradesmen.wordpress.com/2026/03/09/how-to-calculate-your-day-rate-as-a-self-employed-tradesman/
Why Tradesmen Underchargehttps://financefortradesmen.wordpress.com/2026/03/09/why-most-tradesmen-undercharge-for-jobs/
Written by the founder of Finance for Tradesmen, with over 30 years of experience in the electrical industry.
Finance for Tradesmen 
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