30/04/2026
How to work out your hourly rate as a sole trader 🔧
One of the most common mistakes tradespeople make is pulling a number out of thin air — or just copying what a mate charges. Here's a simple way to work out your rate properly, using some realistic numbers.
Start with what you actually need to earn Write down all your personal monthly outgoings — mortgage or rent, food, bills, fuel, everything. That's your baseline. You're not working for fun, you're running a business that has to pay your life.
Be honest about your real working hours You might have 40 hours a week available, but not all of those are chargeable. Every hour spent quoting jobs, chasing invoices, ordering materials, or doing your books is time you're not billing anyone. Allow 5–8 hours a week for admin and non-chargeable tasks — so realistically you're left with around 32–35 chargeable hours per week.
Factor in holidays and the odd sick day too — around 5 weeks a year where you're not earning. That leaves you with roughly 47 working weeks.
So your real chargeable hours look something like this: 33 hours (average) × 47 weeks = around 1,550 chargeable hours a year
Add up your fixed business costs These come out whether you're busy or not — insurance, tools, van, fuel, phone, any subscriptions. Whatever that monthly figure is, multiply it by 12 and add it to what you need to earn.
Don't forget the tax bill A chunk of everything you earn goes to HMRC. Most sole traders should be setting aside around 25% for tax and National Insurance. If you don't build this in, your rate is lying to you.
📊 Let's run the numbers
Say you need £30,000 a year to cover your personal bills and take-home pay, and your fixed business costs are £500 a month (£6,000 a year).
Personal income needed £30,000
Fixed business costs £6,000
Tax & NI buffer (25%) £7,500
Total you need to earn £43,500
Now divide by your chargeable hours:
£43,500 ÷ 1,550 hours = £28.06 per hour (break-even)
Add a 15% profit margin on top: £32.27 per hour
So a rounded rate of £33–£35 per hour is where you'd want to be — just to keep the lights on and put something back into the business.
And always charge materials separately. Your time is your time. Materials should never come out of your labour rate.
If your current rate is lower than what's calculated, it's worth having a proper look at your numbers. This is exactly the kind of thing a good bookkeeper can help you work through — and for most tradespeople, it's a real eye-opener.
