Ask most tradespeople how they calculate labour on a quote and you'll get a fairly vague answer: "I know how long it'll take, so I just times it by my day rate." That might work on simple jobs you've done a hundred times, but on anything complex, it's a recipe for undercharging. Here's a more rigorous approach.
Working in days creates rounding errors. A "two-day job" gets treated as a fixed cost, but two long days versus two short days can be a three-hour difference. Price everything in hours. It forces you to think concretely about what each phase of the work actually involves: prep, main task, clean-up, client walk-around.
Build a simple estimate for each phase of the job. For example: site survey (1 hr), first fix (6 hrs), second fix (4 hrs), snagging (1 hr). Total: 12 hours. That's your base.
Your labour rate is not what you earn per hour — it's what it costs to put an employee (or yourself) on-site per hour, including all on-costs. For an employee, this means salary divided by billable hours, plus employer's NI (13.8% above the secondary threshold), pension contributions (minimum 3% employer), and any holiday pay or sick pay entitlements.
A rough rule of thumb: add 25–30% on top of gross wage to get your true employment cost. So an employee on £20/hour actually costs you around £25–£26/hour before profit.
Not every hour your staff work is chargeable to a client. Travelling between jobs, loading and unloading the van, attending training, team meetings, and site surveys all consume time that needs to be recovered somewhere. If you're paying a team of two for 40 hours a week but only billing 30 of those hours, your effective rate needs to be higher to cover the gap.
A simple way to handle this: calculate what percentage of your team's time is typically non-billable (often 20–30% for smaller outfits), then divide your total weekly wage cost by billable hours only. This gives you the true hourly cost you need to recover per billed hour.
Even the most experienced estimators get labour hours wrong on occasion. A difficult access situation, a job that uncovers unexpected problems, a new team member who needs guidance — all of these extend labour beyond your initial estimate. Add 10% to your estimated labour hours on any job that isn't completely routine. On complex commercial work, go up to 15%.
This isn't padding the quote for profit — it's accounting for the realistic variability in how long work takes in the real world.
Labour is the hardest cost to recover after the fact. Once you've committed to a fixed price, every extra hour you spend on-site is coming out of your margin. Price it properly upfront and the job has a chance of making the profit you intended.
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Underpricing is the silent killer of trade businesses. Here's a step-by-step method to price every job so your margin stays intact.
Spreadsheets feel free — until you add up the hours lost, the errors made, and the jobs underpriced. The real cost might surprise you.
A professional quote does more than list prices — it builds trust, sets expectations, and protects you if something goes wrong.