Pricing guide
Day rate or fixed price: how to choose on each job
The right pricing structure depends on the job, not a fixed preference. This guide covers where day rate protects you, where fixed price wins the work, and how to combine both without creating a dispute later.
Short answer
Use a day rate when the scope is not yet defined, when opening up the building could reveal more work, or when the client is supplying materials on an uncertain schedule. Use a fixed price when you can describe and measure the job confidently, since it wins work and protects your margin on a defined scope. Many jobs work best as a hybrid: a fixed price for the known work, with provisional sums or day-rate variations for the parts that cannot yet be measured.
Quick check
- Day rate suits unknown scope, opening-up work and client-supplied materials
- Fixed price suits a scope you can describe and measure confidently
- A hybrid quote can fix most of the job and leave defined parts provisional
- Provisional sums need a stated basis for adjustment, not a vague allowance
- Record day-rate variations in writing before the work, not after
- State clearly in the quote which parts are fixed and which are not
- Agree who absorbs risk if a fixed-price assumption turns out wrong
- Keep a running total so the client can see the commercial position
1. Day rate and fixed price are promises about different things
A day rate is a promise to charge for the time and materials the job actually takes. A fixed price is a promise to carry out defined work for a defined figure, whatever it actually costs you. Neither is better in general. Each is a better fit for a particular kind of job.
Choosing the wrong one for the job in front of you is where most pricing disputes start: a day rate on a job the client expected to be fixed, or a fixed price on a job where the scope was never really settled.
2. Where day rate protects you
Day rate keeps you paid for every hour worked, but it does not help you win competitive jobs, and it shifts the ceiling risk onto the client. Be clear at the outset roughly how many days you expect the job to take, even on a day-rate basis, so nobody is surprised by the total.
- The scope depends on what you find once you open up the building
- The client is supplying materials on a schedule you do not control
- The job is small, reactive or genuinely hard to measure in advance
- You are working alongside a client who wants to change decisions as you go
- You do not yet have enough information to price the job with confidence
3. Where fixed price wins the work and protects margin
A client comparing quotes is usually comparing a number, not a methodology. A fixed price is easier to compare, easier to budget against, and signals that you have thought the job through. It also protects your margin, because efficient working benefits you rather than reducing the client's bill.
Fixed price only works if the scope behind it is genuinely settled. A precise-looking total built on an unsettled scope is not protecting your margin, it is hiding the risk until it turns up as a loss.
4. Hybrid: fix what you can measure, flag what you cannot
Most residential jobs are not purely one structure or the other. Fix the price for the work you can describe and measure with confidence, and use a provisional sum or day-rate variation for the part that genuinely cannot be settled yet. State clearly which parts of the quote are which.
Worked example
A hybrid structure
Fixed price for the kitchen extension shell, first fix and finishes. A provisional sum for below-ground drainage, adjusted once trial holes confirm the run. A day rate for any additional work found once the existing wall is opened up.
5. Provisional sums keep the fixed part honest
A provisional sum names a part of the job that cannot yet be fully described or measured, states what information is missing, and sets out how the final value will be adjusted. It lets you issue a fixed price for the rest of the job without pretending to know something you do not.
See provisional sums in building quotes for wording and the difference between a defined and an undefined provisional sum.
6. Write the structure into the quote itself
Some builders manage this through their quoting software, so the day rate and any variation wording is already consistent across every quote rather than retyped each time. However it is done, the structure needs to be visible in the document the client accepted, not just remembered from a site conversation.
- Label each section as fixed price, day rate, or provisional
- State the day rate that applies if day-rate work is needed
- Explain how a provisional sum will be measured and adjusted
- Record any day-rate work as a written variation before it proceeds
- Show a running total so the client can see the commercial position
7. Day rate vs fixed price at a glance
| Day rate | Fixed price | |
|---|---|---|
| Best for | Uncertain or reactive scope | Scope you can measure confidently |
| Wins competitive work | Rarely | Usually |
| Protects your margin | If hours are tracked properly | If the scope holds |
| Client's main risk | Total cost is open-ended | Price is fixed only if the scope does not change |
| Your main risk | Being undercut on a job the client wanted fixed | Absorbing cost if the scope was under-priced |
8. A quick way to choose on the next job
- 1
Can you describe the scope with confidence?
If yes, price it. If no, or if part of it depends on opening up the building, treat that part as day rate or provisional.
- 2
Is the client comparing you against other quotes?
A fixed price is usually easier to win against competing quotes for a defined scope.
- 3
Where is the real uncertainty?
Isolate it into a named provisional sum or day-rate element rather than spreading it thinly across the whole price.
- 4
Is the structure written down?
Make sure the quote itself, not just the conversation, shows which parts are fixed and which are not.
Common questions
Is it better to charge day rate or a fixed price?
Neither is better in general. Day rate suits a job where the scope is not yet settled; fixed price suits a job you can measure with confidence and usually wins competitive work. Many jobs use both structures for different parts of the same quote.
Can I mix day rate and fixed price on the same job?
Yes. Fix the price for the work you can measure, and use a day rate or provisional sum for the part that cannot yet be settled, such as work found once you open up the building. State clearly in the quote which parts are which.
What is a provisional sum in a building quote?
A provisional sum is an identified part of the job that cannot yet be fully described or measured. It states what information is missing and how the final value will be adjusted once it is known.
How do I price a variation on a fixed price job?
Record the added or removed work, its price and VAT effect, its effect on the programme, and who approved it and when, before the work proceeds wherever practical. A site conversation is a poor substitute for a written variation.
Does a day rate protect me from scope creep?
It protects your pay for the hours worked, but it does not protect the client's budget, and it will not win you a competitive job. Say upfront roughly how many days you expect, even on a day-rate basis.
Sources and further reading
Primary and authoritative sources used to check this guide.
- Before you get building work doneCitizens Advice
- Consumer Rights Act 2015legislation.gov.uk
- NRM 2: Detailed measurement for building worksRoyal Institution of Chartered Surveyors
- Buildings and construction VAT Notice 708HM Revenue & Customs
General information for UK residential building work, not legal advice. Contract wording, provisional sums and variations depend on the actual agreement, correspondence and circumstances of the job. Use terms suited to your business and take legal advice for anything contested or high value.