Charge-out rate calculator
Your charge-out rate is the hourly rate you charge customers. Work out the rate that covers your pay and your business costs, or put in what you charge now and see what it really earns you in a year.
What is a charge-out rate?
A charge-out rate is the price per hour you charge a customer for your time. It isn't the same as what you take home: it has to pay you, cover your van, tools, insurance and other running costs, and make up for all the hours you work but can't charge for. That's why a sensible charge-out rate is often well over double what an employee doing the same job is paid per hour.
How to calculate your charge-out rate
- Decide the pay you want for the year, before tax.
- Add up your yearly business costs (not materials you recharge to customers).
- Work out the hours you can actually charge for: weeks you work × chargeable hours a week.
- Divide the first two added together by the third.
Why your hourly rate needs to be higher than it feels
An employee on £20 an hour gets paid holidays, sick pay, a van and tools. When you're self-employed, all of that comes out of your rate, and you only get paid for the hours a customer is paying for. Travel, quoting, chasing suppliers and paperwork are all unpaid.
Hourly rate = (pay you want + business costs) ÷ hours you can charge for in a year
Minimum charges and call-outs
Small jobs still take travel time and parking. Many trades set a minimum charge, such as the first hour or a half day, so a 20-minute job doesn't lose money. Put it on your quote or website so customers know before you arrive.
Day rate or hourly rate?
Hourly suits short or unpredictable jobs. A day rate is simpler for longer work and stops customers counting minutes. Try the day rate calculator too.
Questions
How much should a self-employed tradesperson charge per hour?
Enough to cover the pay you want plus your business costs, divided by the hours you can actually charge for in a year. For most trades that's 1,300 to 1,600 charged hours, not the 2,000 or so an employee works.
How many hours a week can I charge for?
Usually 25 to 35, even when you work 45 or more. Travel, quoting, buying materials and paperwork take the rest.
What is a charge-out rate?
The hourly rate you charge customers for your time. It needs to cover your pay, your business costs and the hours you work but can't charge for, such as travel, quoting and paperwork.
How do I calculate my charge-out rate?
Add the yearly pay you want to your yearly business costs, then divide by the number of hours you can charge customers for in a year. The calculator on this page does it for you.
What's a typical charge-out rate for trades?
It varies a lot by trade, area and experience, so there isn't one right number. Work out the rate your own costs and hours need, then check what similar local firms charge. If your number is below theirs, you're probably undercharging.
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