The moment you put a price on a job, you are making a claim about what it costs you to deliver it. If that claim is based only on parts and the hours on site, the price is almost certainly wrong - not by a small amount, but by a meaningful one. Van costs, travel time, public liability insurance, tool replacement, training, phone contracts, software, and the time spent quoting and invoicing all have a real cost per job. They do not disappear because they are not itemised on the invoice. They just come out of margin. This is how to calculate them and build them into a price that actually reflects the full cost of delivery.
The Cost Categories Most Pricing Misses
A complete cost-per-job model has three layers:
The third category is where most pricing gaps live. It is also the most straightforward to calculate if you go through it methodically.
Van Costs: The Biggest Hidden Number
For most mobile service businesses, the van is the second-largest cost after labour. It covers:
| Van Cost Component | Annual Estimate (varies widely) |
|---|---|
| Finance or lease payment | £4,000-£9,600 (£333-£800/month is a common range for a modern light commercial van) |
| Fuel | Depends heavily on mileage and fuel type. A diesel van doing 20,000 miles/year at 35mpg and 150p/litre = ~£4,600 |
| Insurance | £1,200-£2,500 for a commercial van, more for young or new drivers |
| Servicing and MOT | £500-£1,000/year for a well-maintained van |
| Tyres | £400-£800 depending on mileage and van type |
| Road tax | £335/year for most light commercial vehicles (2025 rate) |
| Breakdown cover | £150-£300/year |
| Racking and shelving | Amortised over 3-5 years |
A realistic total for a single van is often £12,000-£18,000 per year, depending on mileage, lease structure, and age of vehicle. That is a significant number to be recovering across billable jobs.
HMRC mileage rates: If you use a personal vehicle for business (rather than a dedicated business van), HMRC's approved mileage allowance is 45p per mile for the first 10,000 business miles per tax year, and 25p per mile thereafter. These rates are meant to cover fuel, depreciation, insurance and running costs. If you are paying yourself less than 45p/mile, you are subsidising the business from personal funds.
Travel Time: The Cost of Getting There
Travel time is working time. If you charge for two hours on site but spent 40 minutes travelling each way, you have spent 3 hours 20 minutes on that job - of which you invoiced for two. The un-invoiced travel time has a real cost.
There are three ways to handle travel time in pricing:
- Charge for it directly. Some businesses charge a call-out fee that covers travel time and a minimum period on site. Customers understand this and it is common in emergency and specialist trades.
- Build it into the hourly rate. Calculate your total productive (billable) hours per year - which includes travel - and spread your overhead over that number. This is the most mathematically accurate approach.
- Define a service radius. Limit how far you travel without a premium, so travel time stays proportionate to job value. A £200 job that requires two hours of travel is a different proposition from a £200 job ten minutes away.
Tools, Equipment and Training
Hand tools, power tools, test equipment, PPE, specialist kit, and periodic recertification all have a cost that needs to be recovered. These are often thought of as "already paid for" because they were purchased in the past - but replacement is inevitable, and the cost should be treated as an annual overhead.
A reasonable approach is to estimate the annual replacement and upgrade cost of your toolkit (not the full replacement cost of everything at once, but what you realistically spend or should be setting aside per year) and include it in your overhead calculation.
Similarly, any mandatory training or certification renewal (Gas Safe, NICEIC, PAT testing certification, first aid, etc.) has a cost that should be treated as a running overhead, not an irregular surprise.
Building a Realistic Overhead Hourly Rate
The method is straightforward:
- List your annual overhead costs. Van, insurance, tools, software, phone, accountancy, training, PPE, marketing, website - everything that is not materials for a specific job.
- Calculate your billable hours per year. 52 weeks, minus holidays (5.6 weeks statutory = 28 days), minus sick days, minus bank holidays, minus admin time, minus training. A realistic billable year for a sole trader doing their own admin is often 900-1,100 hours, not the 1,800+ that 40 hours x 52 weeks would suggest.
- Divide annual overhead by billable hours. This gives your overhead cost per billable hour.
- Add your target net income. What you want to pay yourself per year, divided by billable hours, gives your required income per hour.
- Add a materials margin. Your mark-up on parts and materials covers the risk of price fluctuations, supplier errors, and the time spent sourcing and managing materials.
The 1,000 hour reality check
Many sole traders discover that their actual billable hours per year - once holiday, bank holidays, quoting time, invoicing time, admin, travel, and quiet periods are accounted for - is around 1,000 hours or less. Dividing your target annual income by 1,000 gives a very different hourly rate than dividing it by 1,800. If your current rate was built on the assumption of 1,800 billable hours, you may be significantly underpricing.
Quote Time and Admin: The Zero-Margin Work
Preparing a quote, following it up, invoicing, chasing payment, responding to supplier queries, and filing accounts are all working hours. For jobs that require a site visit to quote, the cost of the quoting visit is a real overhead - recovered across the jobs that convert, and lost entirely on the ones that do not.
If your conversion rate on quotes is 50%, the cost of every winning job effectively includes the cost of the losing quote as well. That is not a problem - it is just a reality to price into the overhead calculation.
What Accurate Job Pricing Looks Like
Parts priced at actual supplier cost, with a mark-up that covers ordering time, storage, and price risk.
Hourly rate covers target income, overhead contribution, and reflects realistic billable hours - not a theoretical maximum.
Either through a call-out fee, a travel charge, or built into the hourly rate via an overhead contribution per hour.
Annual tool replacement and recertification cost spread across billable hours so it is recovered steadily, not in lumps.
Public liability, employer's liability, and tool insurance included in the overhead calculation.
Overhead costs reviewed each year so the rate reflects actual costs rather than costs from three years ago.
Bottom Line
The total cost of delivering a job is always higher than the parts and the on-site hours. Van costs, travel time, insurance, tools, training, admin, and the overhead of running a business all contribute to the real cost. Pricing that does not account for these is pricing that quietly erodes margin on every job.
The calculation is not complicated. Total your annual overheads. Calculate your realistic billable hours. Divide. Add your target income. The result is a minimum hourly rate that actually sustains the business. If your current rate is below it, you have found the source of the margin pressure.
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