Setting Your Trade Rates for 2027

New Year Prep: Setting Your Rates for 2027

The right time to set your 2027 rates is now, not in January. Rate changes work best when they are decided in advance, applied to a clear date, and communicated before anyone is surprised by them. Trades who leave it until the new year end up either absorbing another year of cost increases or springing an awkward conversation on a customer mid-job.

Why autumn is the right moment

Two reasons. First, you still have a full quarter of work booked, so you can look at real numbers rather than guessing — what you actually earned, what you actually spent, which jobs made money and which quietly did not.

Second, quotes you issue in the autumn often get carried out in the new year. If your price list changes on 1 January but you are still quoting December work at the old rate, you have effectively given away the increase on your first quarter’s work. Decide the number now, put a validity period on your quotes, and the transition takes care of itself.

Work out what you actually need to charge

Most trades set a day rate by looking at what other people in the area charge. That is a sense check, not a method. The method runs the other way round: start from what the business needs, then see whether the market supports it.

Start with your target take-home. What do you need the business to pay you across the year? Be honest, and include pension and holiday, because nobody else is providing them.

Add your overheads. Van finance or lease, fuel, insurance — public liability, tools, van, and any professional indemnity — accountancy, scheme registration and renewals, phone, software subscriptions, PPE, consumables, training and CPD, workwear, waste disposal. Add them up for the year. Most sole traders underestimate this figure badly.

Work out your genuinely chargeable days. This is where day rates get set too low. Take 365 days, remove weekends, holiday, bank holidays and a realistic allowance for illness. Then remove the days you spend quoting, buying materials, chasing invoices, doing paperwork and travelling. What is left is what you can actually bill. For a lot of sole traders that is meaningfully fewer days than they assume.

Divide. Target income plus overheads, divided by chargeable days, gives you the day rate the business needs before profit. Add a margin on top, because a business that only breaks even cannot absorb a bad month or replace a van.

Do the same exercise for materials. If you are marking up materials, make sure the markup covers the time spent sourcing, collecting and warrantying them — not just the price difference.

Then sense-check against the market

Now look outwards. What are comparable trades in your area charging for similar work? Not the cheapest, and not the outfit with six vans and an office — people doing what you do, to the standard you do it.

If your calculated rate is well above the local range, the question is not automatically “drop the price”. It might be that your chargeable days are too low, your overheads are heavy, or your work justifies a premium you have not been articulating. If it is well below, you have been undercharging.

Two things worth resisting: pricing against the cheapest quote in town, and pricing every job at the same rate. Emergency call-outs, awkward access, weekend work and jobs with high risk or high liability all justify different pricing.

How much to increase by

There is no single right answer, but there are some useful anchors:

Cost recovery. Look at what your own costs have done over the last year — materials, insurance, fuel, van, software. If your rate has not moved and those have, you have taken a real-terms pay cut.

Demand. If you are consistently booked weeks ahead and turning work away, the market is telling you something.

Win rate. If you are winning nearly every quote you send, your price is probably too low. A healthy win rate leaves some jobs on the table.

Frequency. A modest annual increase is much easier to explain and to absorb than a big correction every four years.

Telling customers

Most trades dread this and find it is a non-event. The people who react badly to a fair increase are usually the customers who were the least profitable anyway.

A few things that help:

Give notice. Tell repeat and contract customers before the change, not with the first invoice at the new rate.

Keep it short. State the new rate and the date it applies from. You do not need to justify it at length or apologise for it.

Honour existing quotes. Anything already accepted stands at the quoted price. That is what quote validity periods are for — say how long a quote is open when you issue it.

Point at value, not cost. Customers do not care that your insurance went up. They care that you turn up, that the work is right, and that they can get hold of you. Lead with that.

Consider tiering it. Some trades hold rates for long-standing account customers for a period while moving new-customer pricing straight away. That is a legitimate choice as long as it is deliberate.

Do not forget the thresholds

If a rate increase is going to push your turnover up significantly, check where that leaves you on VAT. The registration threshold is £90,000 of taxable turnover, and crossing it changes your pricing arithmetic for domestic customers, who cannot reclaim it. Better to plan that transition than trip over it.

If Making Tax Digital for Income Tax applies to you — it is mandatory from 6 April 2026 for qualifying income over £50,000, from 6 April 2027 over £30,000, and from 6 April 2028 over £20,000 — a higher rate may also change which phase you fall into. Worth a conversation with your accountant while you are doing the numbers.

Charging more usually means choosing better work

Raising your rate is easier when you are not dependent on whatever job turns up next. Steady, local lead flow gives you the confidence to hold a price rather than discount to fill the diary.

Trade Pilot is free to join and only charges when a real local job lands in your inbox, with each lead sold to no more than three trades in the area. You are not bidding against twenty others, and you are not paying a monthly fee in the quiet months.

FAQ

How often should I review my rates? Once a year, at the same point each year, is enough for most trades. Reviewing annually keeps the increases small and predictable. Review sooner if your costs jump sharply.

Will I lose customers if I put my prices up? You will probably lose a few, and they will tend to be the ones who cost you the most to serve. Trades who raise rates sensibly usually find turnover holds and profit improves.

Should I publish my day rate on my website? It filters out price-shoppers and saves you time, which many trades value. Others prefer to quote per job so the price reflects the work rather than the hours. Either is defensible; pick one and be consistent.

What do I do about quotes I have already sent? Honour them. Put a validity period on every quote you issue — thirty days is common — so there is a clear cut-off and no argument later.

Is a day rate or a fixed price better? Fixed prices suit well-defined jobs and reward you for working efficiently. Day rates suit jobs where the scope is genuinely uncertain, such as fault-finding or remedial work in old properties. Most trades use both.

How do I know if I am undercharging? Two quick tests: you win almost every quote you send, and after paying yourself and your costs there is nothing left over. Either one on its own is a signal; both together is conclusive.

Related reading: how to price a job · day rate vs price work · protecting margins from rising material costs · VAT threshold for trades