How do I know if my hourly rate is too low?

Work out your true hourly rate from annual costs divided by realistic chargeable hours, then compare it with what you actually charge. If you are busy every week and still cannot pay yourself properly or build a tax reserve, the rate is too low — not the workload.

Should I charge for quoting and site visits?

Charge for surveys that take real time, involve access equipment or produce a specification the customer could use elsewhere. Quick look-and-price visits for local work are usually best kept free but qualified on the phone first, so you are not driving 40 minutes to price a job with no budget.

What contingency should I add to a fixed-price job?

For straightforward work in a modern property, 5% on labour is usually enough. For pre-1930s buildings, unknown services or anything you cannot inspect before starting, 10% plus a written list of what the price excludes is safer.

Pricing & Quoting for UK Tradespeople | The Trades Business Builder

Most trade businesses that feel busy but broke have a pricing problem, not a work problem. The rate was set years ago, or copied from someone down the road, and it has never been tested against the real cost of running a van, an evening of paperwork and a week of rain.

This hub takes you from true hourly rate, through materials markup and travel recovery, to a quote you can defend on a doorstep — and the discipline to walk away from jobs that only look profitable.

Start with the numbers

What this hub covers

Topic clusters

Written in the order the decisions actually arrive.

Know your real cost
Everything you must recover before a penny is profit.
Choose a pricing model
Fixed price, hourly, day rate or call-out — and when each one hurts you.
Materials, markup and margin
Markup and margin are not the same number. Mixing them up is expensive.
Quotes that hold up
Presentation, validity, contingency and change control.

Marcus on this hub

What matters most here

The three things that change the numbers fastest in this part of the business.

Start from billable hours, not the hours you work

A 45-hour week is not 45 chargeable hours. Quoting, supplier runs, invoicing, waiting for deliveries and driving between jobs are all real hours that no customer pays for directly. In most one-van trade businesses the honest figure lands between 26 and 32 chargeable hours a week once holiday, sickness and weather are taken out.

Divide the money you need — your wage, van, insurance, tools, phone, accountant, training and a reserve for the quiet months — by those chargeable hours. That number is your true hourly rate. If the rate you quote is below it, every job pushes you further behind however hard you work.

Markup and margin are different numbers

Adding 20% to a £100 material cost gives you £120 and a margin of 16.7%, not 20%. Trades lose thousands a year to that single confusion because they set markup as if it were margin and then wonder where the money went.

Decide the margin you need on materials, then work the markup back from it: markup = margin ÷ (1 − margin). A 25% margin needs a 33.3% markup. Put the number in your quote template once so you are not doing the arithmetic on a customer's driveway.

Price the risk, then hold the price

Old properties, unknown pipework, and anything behind plaster deserve a contingency line rather than optimism. A 5–10% contingency on labour is not padding; it is the difference between a variation conversation and eating the cost.

Give every quote a validity period — 14 or 30 days is normal — and say plainly that material prices are re-checked if the customer accepts later. Then hold the price you wrote. Discounting on the doorstep teaches the customer your first number was invented.

Tools

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Straight answers

Common questions

How do I know if my hourly rate is too low?: Work out your true hourly rate from annual costs divided by realistic chargeable hours, then compare it with what you actually charge. If you are busy every week and still cannot pay yourself properly or build a tax reserve, the rate is too low — not the workload.
Should I charge for quoting and site visits?: Charge for surveys that take real time, involve access equipment or produce a specification the customer could use elsewhere. Quick look-and-price visits for local work are usually best kept free but qualified on the phone first, so you are not driving 40 minutes to price a job with no budget.
What contingency should I add to a fixed-price job?: For straightforward work in a modern property, 5% on labour is usually enough. For pre-1930s buildings, unknown services or anything you cannot inspect before starting, 10% plus a written list of what the price excludes is safer.

Pricing & Quoting

Start with the numbers

Know your real cost

Choose a pricing model

Materials, markup and margin

Quotes that hold up

Start from billable hours, not the hours you work

Markup and margin are different numbers

Price the risk, then hold the price