Your hourly rate should be calculated from your costs, not copied from a competitor. Here is the formula:
- Calculate your annual costs: Target income + pension + insurance + van + tools + competent person scheme + accountant + phone + PPE + training + marketing = total annual costs.
- Calculate your billable hours: 52 weeks minus 5 weeks holiday minus 1 week sick minus 1 week training = 45 working weeks. Multiply by 5 days = 225 days. Subtract 25-30 days for admin, quoting, and non-billable time = approximately 200 billable days. Multiply by 7 productive hours per day = 1,400 billable hours.
- Divide costs by billable hours: If your annual costs are £65,000 and you have 1,400 billable hours, your minimum hourly rate is £46.43. Add 15% profit margin = £53.39. Round to £55 per hour.
This calculation tells you the minimum you need to charge. The market may support a higher rate — if so, charge more. Your rate should also account for your experience level, your qualifications, and the value you provide. An electrician with 15 years of experience, a C&G 2391, and a reputation for reliability should charge more than a newly qualified electrician with no track record.
In the app
Calculate your true hourly rate and job profitability
Elec-Mate job profitability calculator works out your true costs per hour, factors in all overheads, and tells you whether each job actually makes money.