How to price a trade job: labour rate calculator and worked examples

A mate of mine, a decent joiner, was flat out for a whole year. Booked solid, turning work away, van never still. At the end of it he sat down with his accountant and found he'd earned less than the year he was employed. He wasn't lazy and he wasn't slow. He just priced every job off a day rate he'd picked years ago and passed his materials on at what he paid for them.

Being busy and making money are two different things. Plenty of good tradesmen work themselves into the ground and wonder why there's nothing in the account.

This is how to price a trade job from your real numbers, so the price on the quote actually pays you. We'll work out your true labour rate, sort the materials, add overheads and profit, then run two full jobs with real figures.

Why guessing the price loses you money

Most trades price a job one of two ways. They either pull a day rate out of the air, or they look at what the last bloke charged and shave a bit off to win it. Both feel quick. Both are guessing.

The problem is that a day rate hides all the costs that don't show up on the day. Your van doesn't cost you anything the morning you drive it to site, but it costs you plenty across the year in finance, fuel, tax, insurance and servicing. Same with your tools, your phone, your accountant, your public liability cover. If your day rate doesn't carry a slice of all that, every job quietly loses a bit, and you don't feel it until the year's done.

There's no two ways about it: the price has to cover three things. Your time, your materials, and your overheads. Then profit sits on top. Miss any one of those and you're working for less than you think.

Step 1: work out your real labour rate

Your labour rate is the money the business needs to earn for your time on the tools. Not what you take home after tax, and not a number that sounds about right. It comes from two figures divided by a third.

Start with the wage you want your time to earn for the year. Say you want the business to pay you £50,000 for the graft, before tax and National Insurance. That's your target.

Now the bit most people get wrong: billable days. There are 260 weekdays in a year, but you don't bill 260. Take off holiday, the odd sick day, bank holidays, and then the days that pay you nothing directly: quoting, pricing, buying and collecting materials, van maintenance, chasing invoices, and the days weather stops you. Be honest and it lands around 200 billable days for a one-person outfit. Plenty of trades bill fewer.

So the wage side of your day rate is £50,000 divided by 200, which is £250 a day.

Then add your overheads. Write down what the business costs you across a year whether you work or not:

• Van finance or lease, plus fuel, tax, insurance and servicing
• Public liability and any tools or professional cover
• Tools, consumables and replacement kit
• Phone, broadband, and any software or subscriptions
• Accountant, bank charges, and workwear

For a lot of solo trades that lands around £12,000 a year. Spread across 200 billable days, that's £60 a day your rate has to carry just to keep the business running.

Add the two together and your break-even day rate is £250 plus £60, which is £310. That's the number where you've paid yourself and covered your costs and made nothing. Charge that and you've just broken even.

Now add profit

Profit is what's left after your wage and every cost are covered. It's the buffer for the job that overruns, the customer who pays late, and the quiet month. On small jobs a net margin of 15 to 25 percent is fair and healthy.

Put 20 percent on the break-even rate: £310 times 1.2 is £372. Round it to £375 a day. On an eight-hour day that's roughly £47 an hour. That is your real, costed labour rate. Not a guess, a number you can defend.

Step 2: price the materials properly

Materials are simple to price and easy to give away. You buy them at trade, and the temptation is to pass them on at exactly what you paid, because it feels fair to the customer. It isn't fair to you.

Think about what the buying side of a job actually involves. The time driving to the merchant and back. The money tied up in the customer's materials while you wait 30 days to get paid. The waste you skip. And the warranty: if that valve or that panel fails in six months, you're the one going back to sort it, not the customer and not the merchant.

A markup of 10 to 20 percent on trade-price materials covers all of that. It's standard across the trade and no reasonable customer blinks at it. On a job with £500 of materials, a 15 percent markup is £75. That £75 pays for the half-day you spent sourcing and the risk you carry after. Give it away and you've worked the buying for free.

Step 3: put the whole job together

Once you've got a costed day rate and a materials markup, pricing a job is just adding up. Labour days at your rate, materials at cost plus markup, then any job-specific extras like skip hire, parking, congestion charge, or specialist hire.

Here's a full job priced properly. Say you're replacing a run of garden fencing: 18 metres of closeboard, eight new posts, two days for one person.

Round it to £1,450 and you've a clean, defensible quote. Your wage is in there, your overheads are in there, your profit is in there, and the materials have carried their own weight.

Now look at how the busy-but-broke version prices the same fence. Day rate of £200 pulled from memory, two days, so £400 labour. Materials passed on at the £520 they cost. No disposal line because he forgot it. Total: £920. He's £530 light on the same job, and the skip comes out of that. Do 100 jobs a year like that and the gap is where a proper wage went.

A second worked example: a two-day bathroom tiling job

Different trade, same method. You're tiling a bathroom: walls and floor, roughly 22 square metres, a day and a half of labour but you'll price it as two days because there's setting-out, cutting round the fittings, and grouting the next morning.

Round to £1,300. Notice you priced the labour at two days even though the graft is a day and a half. That's not padding. The half day covers the setting-out and the grouting return, both real time on the job. Price only the days you're physically laying tile and you've given away the fiddly hours that make the finish good.

Day rate, fixed price, or cost-plus?

Three ways to present the same costed job, and they suit different work.

Fixed price is the one to reach for when you can measure the job. You've walked it, you know the scope, you've costed it from your real numbers. A fixed price pays you for being good, because if you work faster than you estimated, the gain is yours. It also gives the customer certainty, which wins more jobs than a vague day rate.

Day rate earns its place on open-ended work where the scope keeps moving: chasing a hidden fault, an awkward renovation where you don't know what's behind the wall, or snagging. If you can't measure it, don't fixed-price it, because you'll carry every surprise. The mistake is day-rating a job you could have measured, because you cap your own earning on exactly the days you work fastest.

Cost-plus means you charge for time and materials as they're used, plus an agreed percentage. It suits long or evolving jobs where a fixed price would be a guess and both sides want it open and honest. Just be clear in writing about the percentage and how you record hours, or it turns into an argument at the end.

What NOT to do

1. Don't price to match the cheapest bloke. There's always someone cheaper, usually someone about to go under. Racing them to the bottom means you go with them. Price your job, explain the value, and let the ones who only want cheap go elsewhere.
2. Don't forget the days that pay nothing. Quoting, buying materials, chasing invoices and van time are all unpaid, and they're why you bill 200 days, not 260. If your day rate assumes you work every weekday, it's too low.
3. Don't pass materials on at cost. The buying, the tied-up cash and the warranty risk are all real work. A 10 to 20 percent markup pays for them. Giving materials away at trade is money straight off your bottom line.
4. Don't quote a round number off the top of your head on site. The customer asks "roughly what are we looking at" and it's tempting to blurt a figure to seem confident. Say you'll price it properly and send it over the same day. A number you guess on the doorstep is a number you're stuck with.
5. Don't leave variations unpriced. When the customer adds "while you're here, can you also...", price it before you do it, even a quick line by text. Extras done as favours are the fastest way to turn a profitable job into a break-even one.

The habit that makes this stick

Price every job the same way, every time, even the small ones. Labour days at your costed rate, materials with a markup, extras listed, profit already inside the rate. Once it's a routine you stop leaking money on the jobs you rush.

The reason most trades don't is that pricing properly on paper, at the kitchen table at 9pm, is a pain. So they guess to save the evening. The TradeStash app builds the quote from your costed rate on the spot, so the sums are done before you leave the driveway and the price that goes to the customer is one that actually pays you. That's the whole point of getting the pricing right: you do the work once and you get paid properly for it.