Dividing annual costs by every hour on the calendar assumes you can sell time spent quoting, travelling and running the business. In the example here, the gross model has 2,080 hours but only 1,250 are available for billing. That difference changes the hourly cost the business must recover.
This guide calculates a tradesperson’s hourly rate from an explicit cost and capacity model. The downloadable Excel file separates those inputs, then shows a cost per billable hour and a modelled selling amount.
The examples are arithmetic assumptions, not UK market rates, payroll calculations or legal leave entitlements. Choose a consistent business basis and apply actual tax treatment separately. A calculated rate helps review pricing; it does not prove the hours will be sold or change an agreed offer.
Download the Jobsworth hourly-rate calculator
One Excel file with a blank annual-capacity model, a worked rate, a lower-billable-hours scenario and instructions. Enter your own time and cost assumptions.
Define whose capacity the rate covers
Start by choosing the person, team and annual period represented. The costs and hours need to refer to the same basis. Dividing a whole business’s annual costs by one person’s capacity can mean something different from calculating an individual labour input.
Record that choice with the estimate. A rate used internally for costing may include different allocations from a customer-facing hourly charge. Keep those purposes visible so a colleague does not insert a selling rate where the estimate expects a cost.
Use the worksheet as a reviewed model rather than a substitute for business accounts. Decide which labour and business-cost amounts belong in the calculation using the relevant information for your business. The headings provide categories to examine, not a tax classification.
Calculate gross working time
On Your rate, enter weeks, working days per week and hours per working day. The gross formula multiplies those three numbers. Enter a schedule appropriate to the model rather than copying the example by habit.
The Worked rate tab uses 52 weeks, five days and eight hours, giving 2,080 gross hours. It then deducts unavailable and non-billable time separately. That structure keeps the starting point visible instead of hiding all assumptions inside one estimated annual total.
Convert any day-based exclusions into hours using your actual basis. The example’s 200 hours of leave and 80 other unavailable hours are illustrative inputs only. Do not interpret them as a statement of entitlement or the right working pattern for every person.
Avoid excluding the same day twice. A closure already removed from the weeks input should not also be deducted as unavailable hours. The model needs distinct inputs even when the working calendar contains several kinds of non-working period.
Identify time not sold under the model
Review quoting, administration, travel and other time according to how the business actually charges. Some time may be separately billable or included in a fixed package. The worksheet does not decide that policy; it records the hours you expect this model not to sell directly.
The example deducts 300 hours for quoting and administration and 250 for non-billable travel or other time. Together with the two unavailable categories, exclusions total 830 hours. Subtracting them from 2,080 leaves 1,250 billable hours.
Use actual time records or explicit assumptions where available. A calendar showing a day booked at a property does not automatically tell you how much time was billed or allocated productively. Keep the basis of each exclusion understandable to the person reviewing the rate.
The workbook requires a positive remaining capacity. If exclusions meet or exceed gross hours, the rate is withheld and the model asks you to check them. A tidy percentage cannot repair a denominator that leaves no hours available.
Select the annual cost basis
Enter the labour-related amount, vehicle and tools allocation, administration and insurance allocation, and any other reviewed annual amount. The example uses £30,000, £8,000, £6,000 and £4,000 respectively, totalling £48,000.
Those categories need your own definitions. A labour-related input may require appropriate business or payroll information, while an overhead allocation follows your estimating method. The worksheet supplies no employer-cost formula and does not decide deductibility or personal take-home pay.
Check for overlap among categories. A tool allocation included in one broad overhead figure should not be entered again independently. Equally, do not omit an actual category because the file’s example did not require a separate named line for it.
Enter known zero values deliberately and keep unknowns blank. The file withholds a rate when the required cost inputs are incomplete. That is preferable to displaying a low apparent cost because a missing allocation silently became zero.
Calculate cost and selling rate
Cost per billable hour divides the selected annual cost basis by modelled billable hours. In the worked tab, £48,000 divided by 1,250 gives £38.40. This is the cost figure produced by those assumptions, before a target margin is applied.
The illustrative target margin is 20% of selling price. Dividing £38.40 by 0.80 gives a modelled hourly selling amount of £48. Enter whole percentage numbers in the input, so 20 means 20%, and use your actual target rather than treating the example as advice.
At 1,250 hours and £48, modelled annual sales are £60,000, leaving £12,000 above the selected cost basis. That remainder is not automatically a net business result. It depends on the costs included and the difference between assumed and realised activity.
The calculator leaves actual tax presentation outside the model. Review the business and supply treatment before using a selling amount in an offer. The formula cannot infer a rate or obligation from the work’s UK location.
Test lower billable capacity
The Lower billable capacity tab adds 200 hours to the final exclusion category. Annual costs stay at £48,000, but billable hours fall to 1,050. The cost per billable hour becomes about £45.71.
Maintaining the same illustrative target margin produces about £57.14 hourly selling amount. The displayed figures round to pennies, while the formulas retain precision. The scenario shows the mathematical effect of the denominator rather than predicting a market price you can achieve.
Run a similar test on your own model before relying on one capacity estimate. Identify which exclusion or unsold-time assumption changes the result most, then review the evidence behind it. A lower target rate based on optimistic hours may not recover the selected costs if those hours never sell.
Use the rate without double-counting
For fixed-price packages, decide how this hourly model supports the estimate. You may use a cost per hour to build the proposed work rather than promise to charge the customer every recorded hour. Compare actual time and costs with the agreed package afterwards. Keeping that distinction clear prevents an internal capacity calculation from becoming an unintended customer billing arrangement.
When entering a rate into a job estimate, check what it already contains. A cost per billable hour incorporating overhead allocation can be counted twice if you add the same overhead again as another item. The rate and estimate need compatible definitions.
Save a dated model with its assumptions and compare them with actual billed time and recorded costs through your normal review. A worksheet is most useful when the business can explain why its inputs changed, rather than keeping a rate whose original basis nobody remembers.
Choose one annual period and fill the blank inputs today. Review the excluded hours and cost allocations, then compare the base result with a lower-capacity case. Use that evidence to support a pricing decision rather than adopt somebody else’s headline hourly charge.
Sources and further reading
Review estimated and recorded costs
Explore Jobsworth costs and reporting alongside your estimating process.
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