How to Price a Domiciliary Care Tender in 2026
How to price a domiciliary care tender in 2026: build the rate from NLW, travel time, mileage and on-costs so it wins and survives the contract.
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Pricing a domiciliary care tender means building your hourly rate from the true cost of safe, legal delivery, then checking it funds every commitment in your bid. The rate has to cover care worker pay, travel time, mileage, wage on-costs and business overhead. Get it wrong and you either price yourself out or win a contract you cannot staff.
At a glance
- From April 2026 the National Living Wage is £12.71 per hour for workers aged 21 and over.
- The Homecare Association Minimum Price for Homecare for 2026/27 in England is £34.42 per hour, up from £32.14 in 2025/26.
- The minimum price covers compliant pay, travel time, mileage, waiting time and wage on-costs, plus a minimum business contribution.
- Employer National Insurance sits at 15% from a £5,000 threshold, which reshaped care pricing from April 2025.
- Your price must fund your method statements. A bid that promises more than the rate pays loses on quality within months.
What goes into a domiciliary care hourly rate?
A domiciliary care rate is the sum of direct pay, on-costs, travel, and a business contribution, divided across the contact hours you are paid for. The single biggest error is pricing the contact hour as if the carer only costs their hourly wage. They do not.
A compliant rate carries the care worker's pay for contact time, paid travel time between calls, mileage, holiday pay, pension, employer National Insurance, sick pay cover, training and supervision time, and a share of office, management, recruitment, insurance and software costs. The Homecare Association bundles these into a single minimum figure precisely because providers who cost only the wage go out of business.
What is the minimum you can charge for homecare in 2026?
The defensible floor for 2026/27 in England is £34.42 per hour, the Homecare Association minimum price. It builds up from the National Living Wage of £12.71, adds travel time, mileage, waiting time and wage on-costs, then adds a minimum contribution to the cost of running a compliant business.
This matters because the average fee state-funded homecare actually received in 2025/26 was £24.10 per hour, well below the minimum price. That gap is the commercial reality of the sector. When you price a council tender, you are deciding how much of that gap you can absorb before quality, recruitment or solvency suffers. Pricing below the minimum is a deliberate risk, not a default.
How do you price travel time and mileage?
Travel time is paid working time and must be costed into every rate. Care workers moving between calls are working, and failing to pay for that time breaches the National Minimum Wage Act 1998 once it drags average hourly pay below the statutory rate.
Model the geography of the round. A tight urban patch with 10-minute hops carries far less travel cost per contact hour than a rural patch with 25-minute drives between clients. Cost the average travel minutes per call, multiply by the pay rate, and add mileage at a defensible pence-per-mile figure. Tenders covering wide rural areas need a higher rate than dense urban ones, and a credible bid says so rather than pretending travel is free.
What on-costs do bidders most often forget?
The on-costs that sink margins are employer National Insurance, holiday pay and management time. From April 2025 employer National Insurance rose to 15% with the threshold cut to £5,000, which added real cost to every care worker on the payroll.
Holiday pay adds roughly 12.07% on top of worked hours. Pension auto-enrolment, statutory sick pay, the cost of covering absence, induction and the Care Certificate, ongoing supervision, and the registered manager and coordinator time that keeps the service safe all sit on top of the contact hour. Build each as a named line, not a vague percentage, so the rate survives scrutiny and the contract term.
How do you price within a council ceiling without gutting quality?
When a tender sets a ceiling rate, price up to the most you can justify within it, then design the operating model to fit, rather than stripping the model to hit a low number. The ceiling is a constraint on the rate, not permission to under-resource the service.
If the ceiling will not fund safe delivery, that is a bid decision, not a pricing trick. Some providers decline a lot rather than win unfundable work. Where the rate is workable, protect the non-negotiables first: compliant pay, travel, supervision and management. Trim discretionary overhead, not the controls that keep people safe. The Procurement Act 2023 most advantageous tender test weighs quality against price, so a slightly higher, fully justified rate often scores better than the cheapest bid.
How do you make sure the price actually funds your method statements?
Cross-check every quality commitment against the rate before you submit. A method statement that promises 15-minute missed-call response, a named coordinator per client, or a training programme beyond the Care Certificate has a cost, and that cost has to live inside the price.
The fastest way to lose a contract is to win it on promises the rate cannot pay for. We run a pre-submission review that stress-tests the price against the commitments line by line, so the bid that reaches the commissioner is deliverable. Where a TUPE transfer applies, the inherited pay and terms under the TUPE Regulations 2006 also have to be priced in, because you cannot cut transferred staff costs to make the numbers work.
What does a well-priced domiciliary bid look like in practice?
A well-priced bid shows the commissioner a rate they can trace to delivery. On the Essex County Council Live at Home 2025 Framework, we won with a model where the price funded the staffing, supervision and rapid response the method statements promised, including a hospital discharge package matched within 24 hours through the named registered manager. The rate held because it was built from the cost of the service, not reverse-engineered from a target.
That is the discipline: price the service you will actually run, evidence each cost, and make sure the number on the pricing schedule pays for the number of carers, the travel and the management your quality answers describe.
Frequently asked questions
How much should I charge per hour for domiciliary care in 2026? Build up from the cost of delivery. The Homecare Association minimum price for England in 2026/27 is £34.42 per hour, which covers compliant pay, travel, mileage, waiting time, on-costs and a minimum business contribution. Council ceilings are often lower, so you decide how much of that gap you can safely absorb.
Do I have to pay care workers for travel time? Yes. Travel between calls is working time and must be paid. If unpaid travel drags average hourly pay below the National Living Wage of £12.71, you breach the National Minimum Wage Act 1998. Price travel time and mileage into every rate.
What is the National Living Wage from April 2026? £12.71 per hour for workers aged 21 and over, the largest cash increase in the rate's history. It is £10.85 for 18 to 20 year olds and £8.00 for 16 to 17 year olds and apprentices.
Why is the council rate lower than the Homecare Association minimum price? Council budgets have not kept pace with statutory cost rises. The average state-funded homecare fee in 2025/26 was £24.10 per hour against a £32.14 minimum price. Providers manage the gap through efficient rounds, mixed funding and disciplined bidding.
Should I bid if the ceiling rate is below my costs? Treat it as a bid decision. If the rate cannot fund safe, compliant delivery, declining protects your business. If it is tight but workable, protect pay, travel, supervision and management first and trim discretionary overhead.
Want your pricing to win and survive the contract?
We price care tenders from the cost of delivery up, then stress-test the rate against your method statements through our 27-criterion quality gate. The version that reaches the commissioner is one you can actually deliver. 92% win rate across 200+ UK care submissions. Companies House 17184263. Book a free consultation.
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