Day rate calculator

You've done the sums on the back of an invoice more times than you'd like to admit. Diary's full, van's loaded, jobs are going well — and somehow there's still not enough left at the end of the month to call it a wage. That's usually not you being bad with money. It's more likely your day rate was only ever built to cover the job in front of you, not the business behind it. If you're asking yourself how much you should charge per day, or what a self-employed electrician, plumber or joiner should really be charging, this is the reasoning behind the number the calculator gives you.

Why overheads count

Materials get quoted for and paid on the job. Everything else — the diesel between sites, the tools that wear out, the insurance that lets you legally work, the software you use to send an invoice — has to come out of your day rate, because there's nowhere else for it to come from. Build your rate purely around the wage you want and you're quietly running those costs at a loss, covering the gap with whatever happens to be left in the account. Overheads aren't extras on top of your rate. They're baked into it before you've earned a penny of actual wage.

What people forget to cost in

Ask most self-employed tradespeople what their overheads are and you'll get "van and fuel." That's the start of the list, not the end of it:

• Van finance or depreciation, servicing, tyres, tax and MOT
• Fuel — not just site to site, but the merchant's and back
• Tools, and the cost of replacing what breaks or goes missing
• Insurance: public liability, tools cover, van cover
• Phone and software — invoicing, scheduling, the basics
• Dead time: loading the van, sweeping up, waiting on a delivery
• Travel that isn't billable but still eats the working day
• Quoting — the jobs you price up and don't win still cost time

Leave enough of these out and your day rate turns into a quiet subsidy scheme, funded by you not paying yourself properly.

How many days are actually billable

A year has around 260 weekdays. Strip out holiday, bank holidays, the odd sick day and the admin you can't dodge — invoicing, ordering materials, the VAT return — and the days you could stand on a job drop fast. Then take another chunk off what's left, because not every hour of a working day is billable either: travel between jobs, quoting, loading the van, waiting on materials all eat into it. The calculator asks you to weigh both of these up yourself — total working days, then the share of a working day that's genuinely chargeable — rather than assume a full year at full stretch. Get either number wrong and your day rate comes out lower than it needs to be — you end up short by exactly the gap between the days you counted on and the days you actually bill.

Floor, not price

The number the calculator gives you isn't what you should charge — it's what you need to charge, on average across a normal year, just to hit your income target once overheads are covered. Go below it and you're not running a business, you're funding one out of your own wage. What you actually put on a quote depends on things the calculator can't see: how in demand you are, how urgent or awkward the job is, what else is going on locally, how much you want the work. Market rate moves around that floor, often well above it. It shouldn't sit below it for long, because every day priced under the floor is a day the business owes you money instead of the other way round.

A worked example

Take the calculator's own defaults. £45,000 target income plus £12,000 a year in overheads means the business needs to bring in £57,000. Budget 220 working days a year, and reckon that only 80% of a working day is genuinely billable once travel, quoting and dead time are stripped out — that's the equivalent of 176 billable days. £57,000 divided by 176 comes to £323.86 a day, or £40.48 an hour on an 8-hour day. That's the floor for that set of numbers. Change the income target, the overheads, the days worked or the billable share in the calculator above, and the floor moves with them.