Pricing Your Work Correctly

The Problem with Guessing

Many tradies undercharge because they:

• Don't account for all overheads
• Confuse markup with margin
• Underestimate time
• Forget non-billable hours

Know Your True Costs

Direct Costs

• Materials
• Labour (including yours)
• Subcontractors
• Equipment hire

Overhead Costs

• Vehicle (payments, fuel, rego, insurance)
• Insurance (public liability, income protection)
• Tools and equipment
• Phone and internet
• Accounting and software
• Marketing
• Training and licenses

Calculating Your Rate

Work backwards from what you need to earn:

1. Target annual income: e.g., $100,000
2. Add overheads: e.g., $40,000
3. Add super and tax provisions: e.g., $50,000
4. Total needed: $190,000
5. Billable hours per year: e.g., 1,600
6. Minimum hourly rate: $119/hour

Markup vs Margin

• 50% markup: Cost $100 → Price $150 → Profit $50 (33% margin)
• 100% markup: Cost $100 → Price $200 → Profit $100 (50% margin)

To achieve 30% profit margin, you need a 43% markup.