Why solo tradespeople underprice more than anyone
Pricing jobs as a solo tradesman comes with a specific trap that employees at a larger firm don't run into: every cost of running the business — the van, the insurance, the tools, the admin time, the days you're sick or between jobs — has to be covered by your day rate alone. If your price is just "what a similar job usually goes for" or "my hourly rate times the hours," it's very easy to end up covering none of that and quietly working for less than it looks like on paper.
The fix isn't complicated, but it does require being honest about your real day rate — not just the number you'd like to charge, but the number that actually covers everything your business needs to keep running.
Hourly vs. fixed-price: which to use when
- Hourly pricing suits jobs where the scope is genuinely unpredictable — diagnostics, repairs, or work where you won't know what you're dealing with until you open something up. It's fair to both sides because you're only charging for time actually spent.
- Fixed-price quoting suits jobs with a clear, defined scope — installations, rewires, fit-outs. Customers strongly prefer fixed prices because they remove uncertainty, and a well-costed fixed price rewards you for working efficiently rather than slowly.
- A hybrid approach works well for many solo trades: quote a fixed price for the core job, and state an hourly rate for anything discovered once work has started that falls outside the original scope.
Whichever model you use, the underlying cost math is the same — you're just choosing how to present it to the customer.
The overhead solo tradespeople forget to charge for
An employed tradesperson has these costs covered by their employer. A solo operator has to build every one of them into their day rate, or quietly absorb the cost themselves.
- Vehicle costs. Fuel, insurance, maintenance and depreciation on the van or truck you use for work.
- Tools and equipment. Both the upfront cost and ongoing replacement of tools that wear out or break.
- Insurance. Public liability and any trade-specific insurance required to legally operate.
- Non-billable admin time. Quoting, invoicing, ordering materials, and answering calls — hours that don't show up as billed job time but absolutely take time.
- Downtime. Days between jobs, sick days, and holiday time all have to be funded by the days you do work.
Worked example: setting a realistic day rate
Here's an example of working backward from real annual costs to a day rate that actually covers them. Every figure is illustrative — your own costs, target income and billable days will differ.
Example: solo tradesman's true day rate
Working backward from annual costs to a day rate
| Item | Annual amount |
|---|---|
| Target take-home income | $52,000.00 |
| Vehicle (fuel, insurance, maintenance) | $7,200.00 |
| Tools & equipment (replacement/upgrade) | $2,000.00 |
| Public liability & trade insurance | $1,400.00 |
| Admin, software & misc overhead | $1,400.00 |
| Total the business needs to cover | $64,000.00 |
Assume 46 working weeks a year and roughly 4 billable days a week (allowing for admin, quoting and gaps between jobs) — that's 184 billable days. $64,000 ÷ 184 = a day rate of about $348, or roughly $44/hr on an 8-hour day, just to cover costs and target income — before any job-specific materials or profit margin on top.
Once you have a true day rate, pricing an individual job is straightforward: estimate the hours or days it will take, apply your rate, add materials at cost plus a markup, and add anything job-specific like permit fees or disposal costs. That total becomes the number that goes on your written quote.
Free to use, no signup — professional quote PDFs in minutes.
Handling material price volatility
Materials are the part of a job price most likely to move between quoting and completing the work, especially for trades where copper, timber or specialty fittings make up a large share of the cost. A few practical habits protect your margin without needing to become an expert forecaster:
- Price materials close to the quote date, not from memory. A quick supplier check before quoting a materials-heavy job avoids quoting off a price that's already gone stale.
- Keep quotes short-dated on volatile items. A 14-day validity window on a job with a lot of copper or timber protects you far better than a 60-day window would.
- Consider a materials adjustment clause for larger jobs. Stating upfront that material costs will be passed through at the price on the day of purchase (rather than the quote date) is standard practice for bigger jobs and rarely causes friction if it's clearly disclosed from the start.
- Order early when a price rise is expected. If you know a job is confirmed and materials are trending upward, purchasing ahead of schedule can lock in your quoted cost.
Knowing when to raise your rate
A day rate calculated honestly today won't stay accurate forever — costs rise, your skill and speed improve, and demand for your work changes. A few signals are worth treating as a prompt to revisit the calculation in the worked example above, rather than waiting for an annual "New Year" price review out of habit:
- You're consistently fully booked weeks in advance. Strong, steady demand is one of the clearest signals that the market will bear a higher rate.
- A specific fixed cost has risen noticeably. Insurance renewal, fuel prices, or a major tool replacement all justify recalculating your baseline.
- You've become measurably faster or more skilled. If a job that used to take you two days now reliably takes one, your effective hourly earnings have already changed — your quoted rate should reflect the value delivered, not just raw hours.
- You keep saying yes to jobs you'd rather turn down. Consistently accepting low-margin work out of habit is often a sign the rate itself needs to move up, not that you need to work harder within it.
Raising rates can feel uncomfortable, but a rate that was calculated honestly a year or two ago and never revisited is very often quietly underpricing the business today — recalculating on a regular schedule, the same way you'd revisit any other business number, keeps the adjustment routine rather than a difficult one-off conversation.
Keep it honest with the customer
A day rate that properly covers your real costs isn't overcharging — it's the number that lets the business exist next year. Once you know that figure, the next step is presenting it clearly and professionally so customers trust the price rather than trying to negotiate it down. Our guide on how to write a quote for trade work covers exactly what a clear, itemised quote should include, with its own worked example.
All figures above are illustrative examples in US dollars. Vehicle, insurance and equipment costs vary significantly by trade, region and business setup.