Written for plumbers, gas and heating engineers, electricians, heat pump and drainage firms, bathroom installers doing their own plumbing, and small multi-trade firms serving landlords, anywhere in the UK.
The short version
- Count the hours you actually bill.Billable hours divided by paid hours is your utilisation. Travel, merchant runs, quotes and return visits are paid but never billed.
- Work out your cost per billable hour.Hourly wage with on-costs, divided by utilisation, plus overheads divided by billable hours. That is your break-even.
- Divide by one minus your net margin.For example, divide break-even by 0.80 for a 20% net margin, then set your call-out fee and half-hour rate from it.
It is tempting to set your rate by looking at what others charge, then wonder why a full diary leaves nothing over. The gap is the hours your engineers are paid for but never bill: driving between jobs, merchant runs, quoting, and going back because the part was not on the van. Build the rate from the hours you actually sell.
Cost per billable hour
Cost per billable hour is the loaded hourly cost divided by utilisation, plus your overheads divided by your billable hours. The loaded cost is the basic wage plus employer's National Insurance, pension and holiday. Utilisation is billable hours over paid hours, and it is the lever owners miss: travel, parts runs, quotes and callbacks are all paid, and none of them is billed.
| Labour per billable hour: £22.50 loaded cost / 0.65 utilisation | £34.62 |
| Overhead per billable hour: £180,000 / 3,900 billable hours | £46.15 |
| Break-even per billable hour | £80.77 |
| Charge-out rate for a 20% net margin | £100.96 |
£80.77 / 0.80Three engineers on £18.00 basic with 25% on-cost (£22.50 loaded), 2,000 paid hours each and 65% utilisation give 3,900 billable hours. The £180,000 of overheads covers vans, fuel, insurance, scheme fees, software, the office and the owner's salary. At the unrounded rate, 3,900 hours bring in £393,750 against £135,000 of labour and £180,000 of overheads: £78,750 profit, 20.0%. Parts margin is on top.
Two firms paying the same wages can need very different rates, because utilisation and overheads decide what each billed hour has to carry.
Keep margin and mark-up apart. Margin is profit over price; mark-up is profit over cost. For example, a 25% mark-up is only a 20% margin.
The call-out fee and the second visit
In the worked example, you might round the £100.96 rate up to a call-out of £110 covering the first hour, then charge £50 per half hour. Tell the customer that price, and what it covers, when they book.
Second visits are where the margin leaks. In the worked example, a return trip to fit a part costs about 1.5 unbilled hours. At 75% first-time fix, 25 jobs in every 100 need one: 37.5 hours, or £1,298 of labour at £34.62 an hour. Raising first-time fix to 85% saves 15 hours, £519, per 100 jobs. A van stock list for each common boiler model moves this more than anything else.
Keep a parts price book at cost plus a stated mark-up, and show parts and labour as separate lines, so a dispute is about one line rather than the whole invoice.
Pricing a service plan
A service plan brings in monthly income and gives you a list of homes to sell replacements to. Price it from the labour cost per billable hour (£34.62 in the worked example), and remember that what is left still has to cover overheads.
| Annual service: 1.5 hours with travel at £34.62 | £51.93 |
| Parts | £10 |
| Left to cover overheads and profit (58.7% of the net price) | £88.07 |
| Plan income a year, net of VAT (£12.50 a month) | £150 |
| Towards overheads and profit from 400 plans | £35,228 |
400 x £88.07
Promise to pay for repairs and the plan may be insurance
Paying for repairs on an uncertain breakdown for a fixed fee has the marks of a contract of insurance. It then needs an insurer carrying the risk, FCA permission or appointed representative status to sell it, and Insurance Premium Tax at 12%. Calling the plan maintenance does not decide it. As of Oct 2026.
FCA PERG 6, applying Medical Defence Union v Department of Trade [1980] Ch 82; Finance Act 1994 Part III
The repair promise is what turns a plan into insurance, and the word maintenance on the leaflet does not change that.
Tell plan holders and landlord clients about a price rise in writing before renewal. A mid-term rise for a homeowner is on the Consumer Rights Act grey list of potentially unfair terms unless your terms allow it with a right to cancel.
Asked in Greymill
Billable hours: 3 x 2,000 paid hours x 65% = 3,900
Labour: £22.50 with on-costs (£18 plus 25%) / 0.65 = £34.62
Overheads: £180,000 / 3,900 = £46.15
Break-even: £80.77 an hour
For a 20% net margin, charge about £101 an hour (£80.77 / 0.80).
As a call-out, rounded up: £110 covering the first hour, then £50 per half hour. Tell customers that price, and what it covers, when they book.
Where it leaks: hours you pay for but never bill, like travel, merchant runs and going back for a part.
If a return trip costs about 1.5 unbilled hours, lifting first-time fix (fixed on the first visit) from 75% to 85% saves 15 hours per 100 jobs. That is about £519 of labour.
Next, I can check your service plan price against the same numbers.
Ask it about your own business
Paste this into Greymill with your own figures, and Cash & Profit works it through for your business.
I run a plumbing, heating or electrical business in the UK. I have [number] engineers on [basic hourly pay] with on-costs of about [percentage], each paid around [hours] a year, and I think we bill roughly [percentage] of paid hours. Our overheads are about [amount] a year. Work out my cost per billable hour and the charge-out rate, call-out fee and half-hour rate I need for a [target] net margin, tell me what ten more points of first-time fix would be worth, and check my service plan price of [price] a month.
More for plumbing, heating and electrical in the UK
- Busy all summer on installs, yet the bank account is emptiest when the diary is fullestBreakdowns pay on the day, but installs, heat pump vouchers and letting agents pay late, so plan cash by the week, not by the season.Read the lesson
- Which VAT rate goes on the invoice: heat pump, boiler, wet room or new build?The VAT rate depends on what you install, for whom and in what kind of building, and charging too little comes out of your own margin.Read the lesson
- Can my engineer legally take this job, and who has to notify it?Gas, electrical and water work each has its own gatekeeper, and a job is not finished until the right person has done it, signed it and notified it.Read the lesson
- I went out for a repair and sold a new boiler: can the customer cancel?A homeowner's cancellation right, the emergency exception and the call-out fee all turn on what you put in writing before you started.Read the lesson
- My engineers run their own vans and carry CIS cards, so they are self-employed, aren't they?Status, travel time, on-call, holiday pay and who may work on gas all follow how the work is really done, not what the paperwork says.Read the lesson
- Letting agents want me to take on their landlords' deadlines: how do I win the work safely?Landlord and agent work is won on reliability, so sell the diary, price the failed visit and keep the legal duty where it belongs.Read the lesson
- The appliance is dangerous, or the customer blames my repair for a flood: what do I do first?When a job turns dangerous or a customer blames you for damage, the order of your first steps and what you write down matter most.Read the lesson
Open the interactive lesson · Every plumbing, heating and electrical lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- Sch 2 Part 1 paras 11, 14, 15 (Pricing, margins and worked examples)
- reg 10, Schs 2 and 3 (Domestic contracts: cancellation, emergency starts and remedies)
- CCR 2013 regs 5, 19, 30 and 31 (Domestic contracts: cancellation, emergency starts and remedies)
- reg 36(1), (2), (4), (6) (Domestic contracts: cancellation, emergency starts and remedies)
- reg 28(1)(e) and (2) (Domestic contracts: cancellation, emergency starts and remedies)
- ss.49 to 52, 55 to 57 (Domestic contracts: cancellation, emergency starts and remedies)
- FCA deferred-payment-credit regime from 15 July 2026; RAO art 60F(2); RAO art 36A (Finance, service plans and insurance rules)
- FSMA ss.19(1), 23(1) (Finance, service plans and insurance rules)
- FSMA s.27 (unenforceable) (Finance, service plans and insurance rules)
- CONC 3.7.3R; CONC 4.5.2G, 4.5.3R, 4.5.3AR and 4.5.4R (Finance, service plans and insurance rules)
- PERG 6.5 (Finance, service plans and insurance rules)
- Rates (Finance, service plans and insurance rules)