Hourly rate and day rate calculator
Billable hours are not working hours
The mistake every new trade makes is to divide the income they want by the hours they work. Quoting, driving, collecting materials, invoicing, the VAT return, the day the customer was not in: none of it is billed, and it is a third of the week for most people. Twenty-five billable hours in a forty-hour week is normal, not lazy. The calculator asks for the hours you can bill, and that number is the whole difference between a rate that works and one that does not.
A worked one
A plumber wants to take home £40,000. The van, tools, insurance, phone and accountant come to £8,000, so the business has to bring in £48,000. Twenty-five billable hours a week for 46 weeks, allowing for holiday, illness and the weeks that just go, is 1,150 hours. £48,000 over 1,150 hours is £41.74 an hour, and at seven and a half billed hours a day, £313.04 a day. Charge £35 because it sounds reasonable and the year comes up £7,750 short, which is the holiday.
Then round up, not down
The figure the calculator gives is the floor, the rate below which the year does not work. It also assumes every billable hour gets paid, and some will not: a customer who disputes a day, a job that was quoted fixed and ran over. Ten per cent of billed hours going unpaid is not unusual in a first year. Nothing in it is profit, a bad month, or the day the van needs a clutch. Most trades who do this sum add ten to twenty per cent on top and are still cheaper than the customer feared. The guide on your real hourly rate walks through the sum from the other end, and fixed price or day rate decides which of the two figures to put on the estimate.