How to Set Your Labour Rate as a Tradesperson (Without Underselling Yourself)

Most tradespeople set their hourly rate by guessing what sounds reasonable, or copying what a mate charges. That's how you end up either losing money or losing jobs. Here's how to work out a rate that actually makes sense for your business.

Why Getting Your Rate Wrong Is Expensive

Too low and you're working hard for a wage that doesn't cover your costs. Too high and you price yourself out of jobs before you've had a chance to show your quality. The goal is a rate that:

• Covers all your business costs
• Pays you a proper wage
• Leaves room for profit
• Is competitive in your local market

You can't hit all four by guessing.

Step 1: Work Out Your Annual Costs

Before you can charge enough, you need to know what "enough" is. Add up everything your business costs you in a year:

• Van: finance or depreciation, insurance, fuel, servicing
• Tools and equipment: purchases, repairs, replacements
• Insurance: public liability, employer's liability, tool cover
• Certifications and memberships: Gas Safe, NICEIC, trade association fees
• Marketing: website, advertising, listing fees
• Accounting and admin software
• Phone and data plan
• PPE and workwear

Most sole trader tradespeople are surprised to find their overheads run to £15,000–£25,000 a year before they pay themselves a penny.

Step 2: Work Out Your Billable Hours

You don't bill for every hour you work. A realistic year looks like this:

• 52 weeks minus 4 weeks holiday = 48 working weeks
• 5 days × 8 hours = 40 hours/week potential
• Minus travel time, admin, quoting, buying materials: realistically 5–6 billable hours/day
• Minus sick days, callbacks, and quiet periods: knock off another 10–15%

A realistic billable figure for a sole trader is around 900–1,100 hours per year. Use 1,000 hours as a starting point.

Step 3: Calculate Your Break-Even Rate

Divide your total annual costs by your billable hours. If your overheads are £20,000:

£20,000 ÷ 1,000 hours = £20/hour just to break even

That's before you pay yourself. Add your target salary — say £40,000 — and divide again:

(£20,000 + £40,000) ÷ 1,000 hours = £60/hour minimum

Add a 20% profit margin on top: £72/hour. That's your floor — the minimum that keeps your business viable.

Step 4: Check Against Your Local Market

Your calculated rate needs to be in range for your area. UK rates by trade (2025):

• Plumber: £45–£80/hour (Gas Safe registered: add £10–£20)
• Electrician: £45–£75/hour (approved contractor: add premium)
• HVAC technician: £50–£90/hour
• Roofer: £150–£250/day
• Gas engineer: £60–£100/hour

London and South East rates run 20–40% higher than the national average. If your calculated rate is well below market, you have room to charge more. If it's above market, look hard at your costs — or your target area.

Fixed Price vs Hourly Rate

Many experienced tradespeople move away from hourly rates for standard jobs. Once you know how long a boiler swap or consumer unit replacement takes, you can quote a fixed price — and earn more per hour when you're efficient.

Fixed pricing also removes the customer's anxiety about the meter running. "£450 to replace the immersion heater" is easier to say yes to than "£65/hour, probably 4–5 hours".

Use hourly rates for investigation work and reactive calls. Use fixed prices for everything repeatable.

Don't Compete on Price

The customers who haggle hardest on price are usually the hardest to work for. Tradespeople who cut their rate to win jobs end up working longer hours for less money. The answer is to compete on speed, professionalism, and trust — not price.

Sending a clean, branded PDF quote within an hour of a site visit does more to win a job than dropping £10/hour off your rate. Customers choosing between three quotes often go with whoever looks most professional and responds fastest — not whoever is cheapest.

Review Your Rate Every Year

Material costs, fuel, insurance, and certification fees all go up. If you haven't reviewed your rate in two years, you're almost certainly undercharging. Build in an annual review — January is a natural time — and put rates up by at least the rate of inflation.

The Fastest Way to Quote at Your New Rate

Once you've set your rate, make sure every quote reflects it accurately. TradeQuote stores your labour rate and uses it automatically when you describe a job — so you never accidentally undercharge because you forgot to update a spreadsheet template. Describe the job in plain English, get a professional PDF, send it from your phone before you leave the site.