FREE CHARGE-OUT RATE CALCULATOR
Employee Charge-Out Rate Calculator for Trades
An employed tradesperson’s wage is only the start. Add employer NI, pension, on-costs and overhead, spread it over the hours they can actually charge, then add your margin — and see the hourly rate to bill.
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Employee cost
Chargeable time
Overhead & margin
Charge-out rate to bill
£41.02/ hr
Bill £41.02/hr (£328/day) to cover cost and overhead and make a 20% margin.
Cost floor uses UK 2026/27 figures (employer NI 15% over £5,000; pension 3% on £6,240–£50,270) and matches the Employee True Cost Calculator. Employment Allowance (£10,500/yr, business-level) not netted off. Estimate only — check current HMRC rates and your own overheads.
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The real cost
An employee costs far more than their wage
The rate you bill has to cover far more than the wage you pay an employed tradesperson.
The wage you pay the employee
Holidays, sick and training days they cannot charge
Employer National Insurance (15% over £5,000)
Auto-enrolment pension (3%)
On-costs: PPE, tools, van, phone, training
A share of business overheads to recover
Non-chargeable travel, yard and admin time
Contingency and business profit
These cannot come out of the wage. They have to be recovered through the hours the employee can actually charge — which is what sets the rate.
Where time goes
The hours you can’t put on a bill
A paid day rarely turns into a full day of billable hours.
An employee is paid for the whole day, but only part of it lands on a customer’s bill. The rest goes on:
Preparing the quote
Ordering or collecting materials
Travel to and from the property
Loading and unloading
Messages and calls with the customer
Invoicing and payment follow-up
The hours on the tools are visible. The rest is easy to overlook — but it is exactly why the charge-out rate has to be higher than the wage.
The calculator includes this time so your charge-out rate reflects how the business actually operates, rather than an ideal working week.
Your results
What the calculator shows you
Once you enter the salary, on-costs, hours, overhead and margin, you will see:
Real chargeable hours
The estimated hours each year that can be charged directly to customers.
Cost floor per chargeable hour
What the employee costs you for each hour you can charge — before overhead or profit.
Break-even rate
Cost plus overhead per chargeable hour — the rate at which you make no profit.
Charge-out rate
The hourly rate to bill the customer — cost and overhead covered, with your margin added.
Markup on cost and overhead
How much the charge-out rate adds on top of the break-even rate.
Equivalent day rate
The equivalent rate for a full chargeable day.
Common mistake
Why setting the rate off the wage gives the wrong answer
Taking the wage and dividing by a 40-hour week assumes the employee costs nothing extra and every hour can be sold.
In practice, part of the week is spent on:
Looking at new work
Preparing quotes
Driving between jobs
Collecting materials
Dealing with suppliers
Completing certificates
Sending invoices
Answering customer questions
If only 28 hours of a 40-hour week can be charged, those hours must recover the cost of the full week — so overhead per chargeable hour is higher than overhead spread across every hour worked.
Worked example
A simple example
How an employee’s cost becomes a charge-out rate once overhead and margin are added.
Employee true cost / year
£38,623
Overhead to recover / year
£8,000
Chargeable hours / year
1,421
Target profit margin
20%
The £38,623 cost plus £8,000 overhead across 1,421 chargeable hours is a break-even rate of about £32.82 per hour.
Add a 20% margin and the charge-out rate is about £41.02 per hour, or £328 a day. Set the rate off the wage alone and you would bill far too little to cover the real cost.
This is an example only. Your result will depend on your working pattern, costs and required profit.
Overheads
What counts as overhead to recover?
Include the annual costs the business must recover through its work.
Van finance or depreciation
Fuel
Vehicle insurance, servicing and tax
Tools and equipment
Tool replacement and repairs
Public liability insurance
Software and subscriptions
Phone and internet
Accountant and bookkeeping
Training and certification
Workwear and PPE
Marketing
Storage or premises
Warranty work and bad debt
Do not include material costs charged separately to a specific job — the aim is the cost of providing labour, not the full selling price of every job.
Pricing
Cost, markup and margin are not the same
Your charge-out rate needs to sit above the employee’s cost and overhead. There are two common ways to add profit.
Markup
Markup adds a percentage to the cost. A £50 cost with a 20% markup becomes £60.
Margin
Margin measures profit as a percentage of the final selling price. A £50 cost at a 20% margin becomes £62.50.
This calculator uses profit margin — the customer rate required for your chosen percentage of the final price to remain as profit after costs are covered.
Site conditions
The charge-out rate is your baseline, not every job’s price
The charge-out rate covers cost, overhead and margin. Some jobs still need an allowance for the site itself.
Restricted access
Long walks from parking
Occupied buildings
Night work
Security procedures
Repeated inductions
Short working windows
Heavily controlled sites
These conditions reduce the productive work completed in a day. A site uplift allows for the additional labour created by the site itself.
How to use it
Use the result as a pricing baseline
The calculator is not designed to price every job automatically. Use the result as a baseline for:
Hourly-rate work
Building fixed-price quotes
Checking your rate is sustainable
Setting labour catalogue items
Comparing estimated vs actual time
Reviewing your rate as costs change
A clear charge-out rate makes the rest of your pricing easier to review. You can still adjust individual jobs for scope, difficulty, risk and site conditions.
FAQ
Frequently asked questions
Common questions about setting a charge-out rate.
Related tools
Build the rate from the ground up
Use these alongside the charge-out rate calculator.
Employee True Cost Calculator
Work out what an employee really costs per chargeable hour — the floor this rate sits on.
See the true cost
True Labour Cost Calculator
The internal hourly cost of labour before overhead and margin.
Work out labour cost
Trade Business Overhead Calculator
Work out the overheads your charge-out rate has to recover.
Add overheads
Stay connected
Keep the price connected to the job
Working out the rate is only the first step — the next is keeping the priced work connected as the job moves forward.
FieldHive lets you save labour fit times, material costs and markups so they can be reused when building quotes. The quote then stays connected to the customer, booking and invoice instead of being rebuilt at each stage.
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