# 15.9, Your first quote: how to not undersell yourself on day one
Most people lowball their first quote because they think like an employee, not a business. You want to be thinking like a one‑person company from day one.
1. How new trades usually set prices (and why it's wrong)
What most new self‑employed trades do:
- Look at their old day's pay on the books.
- Add "a bit extra" per day or copy what they think others charge.
- Ignore the fact that they now have to pay for van, tools, insurance, holidays, sick days, tax, and dead time between jobs.
UK trade pricing guides and calculators constantly stress that this is why so many small trades "work hard but don't see the money" – they never built a rate from the numbers up.
The message: if you just lift your old employed rate, you will undersell yourself.
2. The big mistake: pricing off your old wage
Every decent UK guide for trades bangs on about the same mistake:
- They only think about their wage, not the business cost of providing that day's work.
- They forget to allow for:
- Van costs (finance/lease, fuel, insurance, repairs).
- Tools and replacement kit.
- Insurance (public liability, maybe professional, tools).
- Accountant, software, phone, trade memberships.
- Dead time: quotes, travel, supply runs, admin.
- Holidays, sick days, training days.
Good pricing guides spell out that a typical sole‑trader tradesperson can easily have £10,000–£20,000 a year in fixed overheads before paying themselves a penny.
So if you were on £150/day as an employee and now charge £200/day as self‑employed, you're almost certainly earning less once those costs are stripped out.
3. A simple formula for a viable day rate
The standard method across UK contractor/trade guides is basically the same:
(Target personal income + annual business costs + tax allowance) ÷ billable days = minimum day rate
Pick your target personal income
Example: you want to take home the equivalent of £35,000–£40,000 a year in your pocket.
Add your annual business costs
Typical overheads per year for a one‑person trade business:
| Cost | Typical range |
|---|---|
| Van (finance/lease, fuel, insurance, maintenance) | £6,000–£10,000 |
| Insurance (PL, maybe PI, tools) | £700–£1,800 |
| Tools and equipment | £1,000–£3,000 |
| Accountant | £300–£800 |
| Phone, broadband, software, marketing, memberships, PPE etc. | £2,000–£5,000+ |
Guides regularly show total overheads of £10,000–£20,000/year for a busy tradesperson.
Allow for tax and NI
On a healthy profit, you can easily lose 20–25% of that profit in income tax and NI. Some calculators build this in explicitly when converting a "salary target" into a day rate.
Work out your realistic billable days
Typical example used in contractor/trade calculators:
- 52 weeks
- Minus holidays (4–5 weeks)
- Minus sick days and training (1–2 weeks)
- Leaves roughly 45–47 working weeks.
- You won't bill 8 hours every day; many guides assume 5–6 billable hours per day once you allow for travel, quotes and admin.
Crunch the numbers
A real example from a 2026 UK trades pricing guide:
- Desired pre‑tax income: £57,000 (to give a good take‑home after tax).
- Annual overheads: £15,000.
- Revenue needed: £72,000.
- Spread over realistic working days, that pushes you into the £300–£400/day territory depending on how many days and hours you truly bill.
Other UK guides summarise it as:
"Target annual income + business costs ÷ billable hours = minimum hourly rate, then ×8 for a day rate."
4. What margins do the pros tell you to aim for?
Once you've built a break‑even rate, you still need a profit margin on top. That's what lets you grow, replace kit, and survive surprises.
- UK accountant and contractor guides say a healthy post‑expense profit margin for contractors is typically 15–30%, with construction contractors often towards the 15–25% end because of higher material costs.
- Trade‑specific pricing content aimed at small construction firms regularly talks about 20% as a sensible baseline margin on jobs, with higher margins (25–30%+) for specialist or high‑risk work.
- Practical tradesman rate guides advise: once you've covered wages and overheads in your rate, build in at least 15–25% profit to allow for growth, replacements and surprises.
If your numbers only just cover your wage and overheads, you're not "competitive", you're slowly going broke.
Aim for at least 15–20% margin on top of all your costs as a starting point, more if you're in a specialist niche.
What to do next
- Read: 14.2 – How to price your first job without underselling yourself (the full step-by-step with worked examples)
- Read: 14.1 – Day rate vs price work vs quoted (pick the right pricing model)
- Read: 14.5 – How to explain your price when they've had a cheaper quote (you'll need this soon)
- Read: S16 – Writing your first quote (how to present it so it looks professional)
- Download: First Job Pricing Worksheet (run the numbers step by step)
- Download: Payment schedule and deposit terms template
Sources (UK)
- UK trade pricing guides and calculators – standard day-rate formula (income + costs ÷ billable days), overhead ranges of £10k–£20k/year.
- 2026 trades pricing guide worked examples – revenue targets of £57k–£72k pushing day rates to £300–£400/day.
- UK accountant and contractor margin guides – healthy profit margin of 15–30% post-expenses, 20% as baseline for small construction firms.
- Trade-specific pricing content – common mistake of pricing off old PAYE wage without accounting for business costs.
- HMRC guidance – allowable business expenses for the self-employed.
Know someone who needs this?
Templates you might need
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