Day rates: working out what to charge

The agency's on the phone. Good job, two weeks of cover on a packing line, start Monday. Then the question: "What's your day rate?"

You say a number. It's roughly what a mate charges, or your old hourly rate times eight with a bit on top. They say yes straight away.

That quick yes is the warning. Most engineers going contract price themselves off their old payslip. They forget the rate now has to pay for every day they don't work, and for everything their employer used to carry.

Start with the days you won't bill

A year has 260 weekdays. You won't bill anything like that many.

Take off the bank holidays first. England and Wales has eight in 2027* (GOV.UK). Then your own holiday. On staff, almost every worker gets 5.6 weeks' paid holiday, which is 28 days* for a five-day week. An employer can count the bank holidays as part of it (GOV.UK). If you want the same time off as before, that's at least 28 days* gone.

Then be honest about the rest:

• days off sick, with nobody paying you for them
• training days and ticket renewals
• admin days for invoices, quotes and your tax return
• gaps between jobs, which happen even to good engineers

Write your own figure down. Nobody else can pick it for you. What matters is that it's a real number and not 260.

Then the costs your employer used to carry

On staff, a lot of money was spent on you that never showed on your payslip. Your employer paid a minimum of 3%* into your pension (GOV.UK). They bought your tools, your PPE and your insurance. They paid for your tickets.

Now you pay for all of it. List every cost as a yearly figure:

• public liability insurance, and anything else sites ask for
• tools, meters, PPE and calibration
• van or car, fuel and parking
• tickets and training
• an accountant, and software for your records
• phone and laptop
• a pension, because nobody else is paying in

Most of these are allowable expenses if you're self-employed. GOV.UK's example: turnover of £40,000 with £10,000 of allowable expenses means you only pay Income Tax on the remaining £30,000 (GOV.UK). That helps. It doesn't make the cost go away.

Do the sum

Here's the floor:

1. Decide what you need to take home in a year.
2. Add the tax on it. For 2026 to 2027, the Personal Allowance is £12,570*. Basic rate is 20%* up to £50,270*, then 40%* (GOV.UK). If you're self-employed, Class 4 National Insurance is 6%* on profits between £12,570 and £50,270*, and 2%* above that (GOV.UK).
3. Add your yearly costs.
4. Divide the total by your billable days.

Whatever comes out is the least you can charge and still be as well off as you were on staff. Below it, you're paying to go to work.

Most engineers who run this for the first time get a figure well above what they've been quoting. Believe the sum.

The floor isn't the rate

Here's our view. The floor is a number you never go under. The rate is what the job is worth.

A planned day shift on a line you know is one thing. A 2am breakdown on a servo you've never seen, with trailers waiting, is another. Price nights, weekends and short-notice callouts higher, and say so up front. Set a minimum charge for callouts, so a one-hour fix still covers the drive there and back.

Skills move the rate too. Controls and PLC work, drives and robots usually pay more than general mechanical work, because fewer engineers can do it. The tickets that get you contract work covers which ones sites look for.

It helps to know how the site sees it. A line that's stood still costs the site far more per hour than you do. Engineering managers who have worked out what an hour of downtime really costs rarely haggle over a breakdown rate. The ones who haggle are usually the ones who haven't.

Agency rate or direct rate

Through an agency, check what rate you're actually being quoted. If you're paid through an umbrella, the rate the agency pays isn't your gross pay. Umbrella, limited or PAYE explains what comes off. One thing they can't do: recruitment agencies cannot charge you a fee for finding you work (GOV.UK).

Working direct, you keep the agency's share but carry the risk of not being paid. Watch the VAT threshold too. You must register if your taxable turnover for the last 12 months goes over £90,000* (GOV.UK). VAT registration for engineers covers what that does to your quotes.

Put it in writing

A day rate means nothing until everyone agrees what a day is. Before you start, get these in writing:

• how many hours make a day, and what you charge after that
• rates for nights, weekends and bank holidays
• whether travel time and mileage are paid
• the callout minimum
• payment terms, and what happens if they're missed

If a business pays late, you can usually claim statutory interest at 8%* plus the Bank of England base rate, unless your contract sets a different rate (GOV.UK).

What to do on Monday

1. Count the days you'll really bill in the next 12 months. Put the number on paper.
2. List every work cost you now pay yourself, as a yearly figure.
3. Run the sum and find your floor. Don't quote under it again.
4. Write a one-page rate card with your day, night, weekend and callout rates, travel and payment terms.

* Bank holidays, holiday entitlement, pension minimum, tax and National Insurance rates and bands, the VAT threshold and the statutory interest rate correct as of 5 September 2026. Check GOV.UK's Income Tax rates and self-employed National Insurance rates for the latest.