Hourly rate calculator for trades and freelancers, with job pricing

For guidance only, not legal or tax advice.

How to work out your hourly rate

Many people in the trades and freelancers start from what others charge. It is safer to start from what you need, then check the result against the local market.

Add up what you need a year: the pay you want before tax, plus every business cost.
Work out the hours you can charge for: hours a week × weeks a year × the share that is billable. Quoting, travel, admin and buying materials all take time nobody pays for.
Divide to get your break even rate.
Add a profit margin so the business can save, invest and cope with quiet months. A 20% margin means 20% of the price is profit, which is the same as a 25% markup on cost.

Example: £35,000 pay and £9,000 costs over 1,380 billable hours is £31.88 an hour to break even. With a 20% margin, charge at least £39.86 an hour.

Holidays and weeks worked

Employees are entitled to 5.6 weeks of paid holiday a year. If you work for yourself nobody pays you for that time, so it is wise to plan for it: 52 weeks less 5.6 weeks of holiday and a week or so of sickness leaves about 45 or 46 working weeks.

Costs and VAT

Allowable business expenses such as van costs, tools, insurance and phone bills reduce your taxable profit. If you are VAT registered, add VAT on top of the job price. You must register once your taxable turnover goes over £90,000 in 12 months.

Questions people ask

How do I calculate my hourly rate as a tradesperson?

Add the pay you want to your yearly business costs, divide by the hours you can actually charge for, then add a profit margin. Charging for 75% of a 40 hour week over 46 weeks gives 1,380 billable hours.

What is the difference between margin and markup?

Margin is profit as a share of the selling price. Markup is profit as a share of the cost. A 20% margin equals a 25% markup, and a 50% margin equals a 100% markup.

Should my pay figure be before or after tax?

Before tax. Income Tax and National Insurance come out of your profit, so use the gross amount you want to earn.

How many weeks a year should I plan to work?

Many self employed people plan for 45 to 47 weeks. Employees get 5.6 weeks of paid holiday, which includes bank holidays if the employer chooses, and you will also lose some days to illness and training.

Should I add VAT to my rate?

Only if you are VAT registered. Then you add VAT to your quotes and invoices. This calculator can add 20% or 5% to the job price.

Is this rate what I should charge?

It is the least you need to charge to hit your targets. Check it against what others in your area charge, and price higher for urgent, specialist or out of hours work.