Day rate calculator
Most people price against the days they work. You only get paid for the days you bill. This works out the difference.
Your year
- Days worked 0
- Days you cannot bill Quoting, admin, buying, driving 0
- Billable days 0
The maths
- Your pay plus overheads £0.00
- Break-even day rate Below this you are paying to work £0.00
- Margin added 0%
- Day rate £0.00
If the year goes to plan
- Turnover excluding VAT £0.00
- Profit left in the business £0.00
Nothing leaves your browser. The figures are worked out on your own device and are never sent to us or stored anywhere.
All figures exclude VAT. This is a pricing tool, not tax advice - what you actually take home depends on income tax, National Insurance and how your business is structured.
Why most day rates are too low
Ask someone how they set their rate and the honest answer is usually that it is roughly what the person down the road charges, plus or minus a bit. That is not pricing, it is copying - and it copies their overheads, their holiday and their admin load rather than yours.
The rate that works is built from four numbers, in this order.
1. What you want to earn
Before tax. Be specific and be honest - this is the number the whole calculation hangs off. If you would need £40,000 as an employee to feel fairly paid, do not put £28,000 in because it feels more modest. You are also carrying the risk, the quiet months and the paperwork.
2. What the business costs to run
Everything you would still pay in a month with nothing on: van, insurance, tools, phone, software, accountant, certifications, workwear, advertising, bank charges. For a one-person trade this is commonly £8,000 to £18,000 a year. Add it up properly once - the total is almost always higher than the guess.
3. The days you can genuinely bill
This is where the money goes missing. A five-day week is 260 days a year. Take off holiday and bank holidays, a few days of illness and training, and the fifth of your week that goes on quoting, invoicing, chasing money, collecting materials and driving between jobs - and you are left with somewhere around 180 billable days.
| Days | Running total | |
|---|---|---|
| 52 weeks at 5 days | 260 | 260 |
| Holiday and bank holidays (5.6 weeks) | -28 | 232 |
| Illness and training | -5 | 227 |
| Non-billable time at 20% | -45.4 | 181.6 |
Dividing by 260 instead of 181.6 makes your day rate 30% too low. That single mistake is the difference between a business that works and one that feels like it never quite does.
4. Margin - and margin is not markup
Margin is profit as a share of the price. Markup is profit as a share of the cost. They are not the same number and mixing them up quietly costs money on every job:
| You want a margin of | So you multiply cost by | Which is a markup of |
|---|---|---|
| 10% | 1 ÷ 0.90 = 1.111 | 11.1% |
| 15% | 1 ÷ 0.85 = 1.176 | 17.6% |
| 20% | 1 ÷ 0.80 = 1.250 | 25% |
| 30% | 1 ÷ 0.70 = 1.429 | 42.9% |
| 50% | 1 ÷ 0.50 = 2.000 | 100% |
Add 20% to your costs and you have a 16.7% margin, not 20%. Over a year that gap is real money.
What to do with the number
Treat the break-even rate as a hard floor and the day rate as your default. Then price individual jobs properly on top of it - the job pricing calculator takes this day rate and builds a quote around it, with materials, plant and travel in their own lines.
And if the rate the calculator gives you feels too high for your market, the answer is almost never to drop it. It is to cut the non-billable percentage - the quoting, the chasing, the re-keying - because every point you take off that is a point straight back onto your billable days.
Day rate questions, answered
How do I work out my day rate?
Add what you want to pay yourself for the year to what it costs to run the business for the year. Divide that by the number of days you can actually bill - not the number of days you work. Then divide by one minus your target margin. The result is a day rate that covers your pay, your overheads and a profit.
How many billable days are there in a year?
Far fewer than people assume. Five days a week for 52 weeks is 260 days. Take off 5.6 weeks of holiday and bank holidays and you are at 232. Take off a week of illness and training and you are at 227. Then take off the fifth of your time that goes on quoting, invoicing, buying materials and driving, and you are at about 180. Pricing against 260 days undercharges by about a third.
What is the difference between margin and markup?
Margin is profit as a share of the price. Markup is profit as a share of the cost. A 20% margin means the price is cost divided by 0.8, which is a 25% markup. A 50% markup is only a 33.3% margin. Adding 20% to your costs and calling it a 20% margin is one of the most common pricing mistakes in the trades.
Should my day rate include VAT?
No. Quote and calculate your day rate excluding VAT. VAT is the customer paying tax through you - it is never your money, and including it in your rate makes your pricing look worse than it is and your margin look better than it is.
What counts as an overhead?
Everything you would still pay in a month with no work on: van lease or finance, fuel and servicing, insurance, tools and replacements, phone and broadband, software subscriptions, accountancy, professional memberships and certifications, workwear, advertising, bank charges, and any rent on a unit or yard. Add up a year of it - the total usually surprises people.
Why is my break-even rate useful?
Because it is the floor. Below the break-even day rate you are paying to go to work. Knowing it to the pound tells you instantly whether a cheap job is worth taking to fill a gap, or whether you would be better off spending the day quoting.
Win back the days you cannot bill
Quoting, scheduling, invoicing and chasing payment in one place. Every hour Pipeline saves on admin is an hour you can charge for.