Cost of day rate

[Frimsley]

Work out your total annual costs, including wages, NI, employers liability and public indemnity insurance, postage, advertising, stationary, PPE, fuel, depreciation on capital equipment, servicing equipment, interest on loans, training courses etc etc etc.

 

Add in a percentage for profit, as opposed to wages. Wages is what you take out and spend on beer. Profit is what you invest back into the business.

 

Work out how much time in a year you can actually charge for. That's excluding holiday, being sick, negotiating with that irritating sales man from Yellow Pages, posting stuff here, doing your accounts, going on training courses, chasing bad debtors, doing your own machinery servicing, sitting around waiting for the AA to turn up and start you're knackered van etc.

 

Divide one by t'other. If you've done it right you'll probably be shocked by the answer

[nailer]

Work out how much time in a year you can actually charge for. That's excluding holiday, being sick, negotiating with that irritating sales man from Yellow Pages, posting stuff here, doing your accounts, going on training courses, chasing bad debtors, doing your own machinery servicing, sitting around waiting for the AA to turn up and start you're knackered van etc.

 

Divide one by t'other. If you've done it right you'll probably be shocked by the answer

 

Would you not class all that as `work time` ?

 

Include it if you really want the truth.

[Frimsley]

Would you not class all that as `work time` ?

 

Include it if you really want the truth.

 

It's work time. It's not time you can charge for - as in you don't present Mrs Miggins with an invoice for dismantling her dodgy oak and add a couple of days leave and three hours spent updating your website at the bottom of it. Which is why you exclude it.

 

The price you charge for each hour you charge for has to have an element built in to cover the cost of the hours you can't charge for. Say you know you need £2000 a week to cover all. You aim to work 40 hours a week. This doesn't mean your hourly charge is £50. 10 hours a week may be spent on admin or servicing or whatever that you can't specifically charge out. So you divide by 30, not 40, and charge out at £66.67 per hour.