Charge-out rate calculator for UK trades (with examples)

Charge-out rate calculator for UK trades (with examples)

If you set your hourly rate by copying a competitor or guessing, you will eventually undercharge. A proper charge-out rate protects your cash flow, covers overhead, and leaves room for profit.

Use this formula:

Charge-out rate = (Labour cost + Overhead + Profit target) / Billable hours

Step 1: Calculate annual labour cost

Include the true cost, not just wages.

For an employee, add:

• Gross wages or salary
• Employer NI
• Pension contributions
• Holiday pay
• Training, PPE, tools, and uniforms

For an owner-operator, add:

• Your drawings or target salary
• Pension and NI you still need to fund

Step 2: Total your overhead

Overhead is everything you must pay whether you have work or not.

Typical trade overheads:

• Vehicle finance, fuel, insurance, servicing
• Software, phone, internet
• Accountant, bank fees, card fees
• Marketing and lead costs
• Rent, storage, utilities
• Insurance (public liability, tools, professional)

Step 3: Estimate billable hours

This is the number most people overestimate. Start with a realistic year:

• Weekly hours: 37.5 to 45
• Weeks worked: 46 to 48 (holidays, sickness, quiet weeks removed)
• Billable percentage: 55% to 70%

Example:

42 hours per week x 46 weeks = 1,932 working hours
Billable hours at 65% = 1,256 billable hours

Step 4: Add profit target

Profit is not the same as wages. It funds growth, buffers slow months, and allows you to invest in tools or another van.

A common starting target for small teams is 10-20% net profit.

Example 1: Solo plumber

Inputs

• Labour cost (drawings + NI + pension): GBP 36,000
• Overhead (van, software, insurance, marketing): GBP 18,000
• Profit target: GBP 8,000
• Billable hours: 1,200

Charge-out rate

(36,000 + 18,000 + 8,000) / 1,200 = GBP 52.50 per hour

If your current rate is GBP 45, you are underfunding profit and overhead.

Example 2: Three-tech crew

Inputs

• Labour cost per tech: GBP 40,000
• Total labour cost: GBP 120,000
• Overhead: GBP 60,000
• Profit target: GBP 24,000
• Billable hours: 3 techs x 1,100 = 3,300

Charge-out rate

(120,000 + 60,000 + 24,000) / 3,300 = GBP 61.82 per hour

If you are charging GBP 50, you are missing roughly GBP 39,000 a year.

Sanity checks before you publish your rate

• Set a minimum charge. Short jobs burn travel and admin time. Protect your day with a callout fee or minimum charge.
• Separate rates for emergency work. After-hours should be 1.5x to 3x your base rate.
• Use job-based pricing where possible. Fixed-price jobs reduce arguments and protect your margin.

Make the calculator real in Toolfy

Your rate is only useful if you track actual performance:

• Add a standard labour rate to quotes so margins are consistent.
• Track actual hours in the job timeline so you can compare estimated vs real.
• Review profit per job monthly and adjust rates before peak season.

If you want a quick check, export your last 20 jobs from Toolfy and calculate the actual effective hourly rate. Most teams are surprised.