Turnover target before tax and National Insurance. "Billable days" should exclude holidays, admin and days spent quoting — most sole traders bill roughly 200–230 days a year. If you are VAT registered, add VAT on top of these figures.
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This calculator works out the day rate and hourly rate you need to charge to hit a target income. Enter the income you want to earn, your annual overheads and how many days you realistically bill, and it tells you what to charge — rather than guessing or copying the person down the road.
It is the calculation most tradespeople do backwards. They pick a day rate that sounds normal, then wonder why there is nothing left at the end of the year. This tool starts from what you need to earn and the costs of running the business, and finds the rate that actually delivers it.
The logic is simple: your target income plus your overheads is the turnover you need. Spread that over the days you actually bill — not the 365 in the year — and you have your day rate; divide by your billable hours and you have your hourly rate.
Turnover needed = target income + overheads; Day rate = turnover ÷ billable days; Hourly rate = day rate ÷ billable hours
Add the income you want to draw to your annual business overheads to get the turnover the business must bring in. Divide that by the number of days you genuinely bill customers in a year to get the day rate, then divide the day rate by your billable hours per day to get the hourly rate.
Type the income you want to earn before tax. Be honest about what you need to live on — this is the number everything else works back from.
Enter your annual running costs: van, fuel, tools, insurance, phone, accountant, software and so on. These have to be covered by your charge-out rate before you earn a penny.
Enter the days you actually bill in a year — not 365. After weekends, holidays, illness, quoting and admin, most sole traders bill around 200–230 days. Then set the hours a day you can genuinely charge for.
The calculator shows the turnover you need and the day and hourly rate that delivers it across your billable time.
Billable days are where the sums go wrong. There are 260 weekdays in a year, but you will not bill all of them once you take out holidays, bank holidays, the odd illness, and every day spent quoting, buying materials, invoicing and chasing money rather than on the tools. Using 220 or fewer gives a rate that survives contact with reality.
The income figure is before tax and National Insurance. Whatever this tool says you need to draw, your tax bill sits on top — so pair it with a tax estimate to see the take-home. If you are VAT registered, VAT is added to your rate for the customer and does not change what you keep.
Use it as a floor, not a ceiling. This is the rate that covers your costs and target income at your assumed utilisation; the market, your reputation and the type of work may let you charge more. If the number looks too high for your area, the answer is usually to cut overheads or win more billable days, not to quietly charge less than you need.
Turnover target before tax and National Insurance. "Billable days" should exclude holidays, admin and days spent quoting — most sole traders bill roughly 200–230 days a year. If you are VAT registered, add VAT on top of these figures.
Start from the income you want, add your annual overheads to get the turnover you need, then divide by the days you actually bill in a year. For example, wanting £40,000 with £8,000 of overheads over 220 billable days is £48,000 ÷ 220 ≈ £218 a day. Enter your own numbers above.
Fewer than you would think. From 260 weekdays, take off holidays, bank holidays, illness, and all the unpaid time spent quoting, collecting materials and doing the books, and most self-employed tradespeople bill somewhere between 200 and 230 days. Using a realistic figure is what makes the rate work.
Yes — every one of them. Your van, fuel, tools, insurance, phone, accountant and software all have to be paid out of what you charge before you earn anything. If your rate only covers your desired wage, the overheads come straight back out of it and you end up short.
No. The target income you enter is before tax and National Insurance, so your tax bill is on top of the take-home you are aiming for. Run the resulting income through a self-employed tax calculator to see what actually lands in your pocket.
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