Contents
The “gut feeling” trapWhat your hour must coverNon-billable hours, the blind spotThe calculationCheck afterwardsThe “gut feeling” trap
Most tradespeople set their rate by looking at what the next guy charges. It's comfortable and it's wrong: he doesn't know your overheads, doesn't drive your van and doesn't carry your insurance.
What your hour must cover
- Your net pay
- Your social contributions
- The vehicle: finance or lease, fuel, servicing, insurance
- Tools, their depreciation and replacement
- Professional and decennial insurance
- Phone, software, accountant
- And above all: your NON-billable hours
Non-billable hours, the blind spot
You don't bill the time spent pricing a quote, running to the merchant, chasing an unpaid invoice, doing your books. On a 45-hour week, billing 30 is common. Your rate must therefore absorb 15 hours paid for by 30.
The calculation
Take your total annual overheads, add the pay you want, divide by the number of hours you can REALLY bill in a year. That's your floor. Below it, you work at a loss without noticing.
Check afterwards
A calculated rate is a hypothesis. What confirms it is the real margin on your finished jobs: quote revenue minus everything you paid, your own labour included. After ten jobs, you know whether your rate holds.
