How do you set a realistic hourly rate?
A sustainable rate covers your target income and your business costs, spread over the hours you can actually bill. Break-even rate = (gross annual income + business costs) ÷ billable hours. On top comes a buffer for contingencies and profit. The biggest trap is assuming too many billable hours: of roughly 1,800 workable hours, only 1,200–1,500 are often billable after quoting, travel and admin.
Frequently asked questions
How many billable hours are realistic?
For a construction sole trader often 1,200–1,500 per year. Travel, quotes and admin don’t count as billable.
Which business costs do I include?
Tools and machines, van and fuel, insurance, phone, accountant, workwear, training and depreciation. Enter the yearly total.
Is this rate including VAT?
No, work net of VAT. VAT is invoiced separately and doesn’t belong in your rate.
Why a buffer?
The buffer covers contingencies and is your profit margin. 10–20% is common.