How to price a job as a tradie so it makes money

Most underpriced jobs don’t come from bad maths. They come from pricing a job off what the bloke down the road charges, or off your old wage, and never counting the hours you don’t get paid for.

Here’s the order that works: build a charge-out rate from real costs, price materials on margin, then check the cash timing before you hand over the quote.

What should a tradie’s hourly rate actually cover?

Your rate has to carry the whole business, not just your time on the tools. A rate that only covers your wage leaves nothing for the ute, the insurance or the week you can’t work.

Put these in, every year:

• Your wage. What you want to take home before tax, the way an employee would be paid.
• Super for yourself. As a sole trader you don’t have to, but the ATO’s rate for employees is 12%, which makes a handy benchmark. If you employ anyone, theirs is compulsory and also belongs in the price. Our guide to payday super for tradies covers the timing change.
• Vehicle. Finance or depreciation, fuel, rego, servicing, tyres. See the running costs of a work ute.
• Insurance. Public liability, tools cover, vehicle, income protection if you carry it.
• Licences and tickets. Licence renewals, white card, association fees.
• Tools and consumables. Blades, bits, PPE, fixings, small gear you replace each year.
• Phone, software, accountant and bookkeeping.

Leave out anything and your rate looks cheaper than you are.

How do I calculate a charge-out rate? (a worked example)

This is an illustrative example, not a real business. Say a sole-trader carpenter wants a $100,000 wage.

Yearly item	Illustrative amount
Target wage (before tax)	$100,000
Super set aside for yourself (12%)	$12,000
Ute running costs and repayments	$18,000
Insurance	$4,500
Phone, software, accountant	$5,000
Tools and consumables	$6,000
Licences, tickets, rego, fees	$2,000
Total the business must earn	$147,500

Now the hours. There are 52 weeks in a year, but you won’t work all of them. Take off four weeks for holidays, plus public holidays, sick days and the odd wet or lost week, and call it 46 working weeks of 38 hours. That’s 1,748 hours.

Not every one of those is billable. Quoting, driving to the supplier, invoicing, chasing payments, callbacks and travel all happen on your time. A solo tradie billing 60% of available hours is realistic, which is about 1,049 billable hours.

$147,500 ÷ 1,049 hours ≈ $141 an hour ex-GST, or about $155 once 10% GST is added.

Compare that with the number most people use. Divide the same total by all 1,748 hours and you get about $84 an hour, which is the price of a business that works every minute of the year and never has an admin day. The billable-hours step is the one that moves the number, and it’s the one most online calculators skip.

Test your own version with the job quote margin calculator, and keep an honest record of your billable ratio for a month. You may find it’s lower than 60%.

Should the rate include GST?

Build your rate ex-GST and add it at the end. The ATO says you need to register once your GST turnover reaches $75,000, or is likely to, and the 10% then appears separately on the tax invoice. It isn’t your money: it belongs in the BAS set-aside. The GST and BAS set-aside planner shows what to park each week.

What’s the difference between markup and margin?

Markup is the percentage you add to cost. Margin is the share of the selling price that’s profit. They’re not the same number, and the gap is where tradies lose money on materials.

Say plasterboard, fixings and trim cost you $1,000.

Markup on cost	Selling price	Actual margin
10%	$1,100	9.1%
20%	$1,200	16.7%
25%	$1,250	20%
30%	$1,300	23.1%
50%	$1,500	33.3%

If you want a 20% margin, a 20% markup won’t get you there. You need a 25% markup. The shortcut is to work backwards: cost ÷ (1 − margin you want). For a 20% margin, $1,000 ÷ 0.8 = $1,250.

A good markup also pays for things that never appear on the supplier invoice: wastage, delivery, warranty callbacks and the weeks your money is tied up before the customer pays. That last one gets more attention below.

Why do tradies still end up underpriced?

A few repeat offenders.

1. Pricing off the competition. You don’t know their costs, their super, or whether they’re cutting corners. If you match a price that doesn’t cover your costs, you’ve bought work at a loss.
2. Forgetting non-billable time. Quoting alone can eat a fifth of your week.
3. Pricing the labour but not the risk. Unknown conditions, access problems and variations need a contingency or a written variation clause.
4. Using last year’s rate. Materials, insurance and vehicle costs move. Review the rate at least twice a year.
5. Treating GST as income. It isn’t yours to spend.
6. Ignoring employee on-costs. If you have staff, wages aren’t the only cost: super, leave and workers compensation come on top, and casual employees on the national minimum wage get a 25% casual loading. Price them in the labour line.

Does a profitable quote still leave you short of cash?

Yes, and this is the part that surprises people. A job can be correctly priced and still squeeze you, because you pay before the customer does.

Illustrative example: a bathroom job quoted at $12,000 ex-GST. You buy $4,000 of materials up front, pay two days of a subbie at $1,200, and put in 60 hours yourself. Your supplier wants payment in 30 days. The customer pays in two stages, with the final 30% about 45 days after practical completion. You can be thousands out of pocket for weeks while the job shows a healthy profit on paper.

Three ways to shorten the gap, in order of cost:

• Take a deposit and stage payments. Our guide to getting paid faster goes through deposits, progress claims and invoice terms.
• Use supplier terms well. A trade account with 30-day terms is the cheapest funding you’ll ever get. See materials supplier accounts.
• Put a standby facility behind the business. If the gap is regular, a cash flow loan for tradies lets you carry a good job without squeezing the ones in the pipeline. Plot your own gap on the cash flow gap planner, then check your options if it’s wider than your buffer.

How often should I review my rate?

Twice a year is a good habit: once around EOFY, when your accountant has the real numbers, and once in January before the busy quoting season. Pull out last year’s actual vehicle, insurance and supplier costs and compare them with what you assumed. If your billable ratio came in lower than 60%, that’s not a failure, it’s data. Either lift the rate or cut the non-billable hours, for example by batching quotes into one afternoon and invoicing the same day a stage finishes.

Also keep a simple job log: quoted hours against actual hours, quoted materials against actual. After ten jobs you’ll see which types of work you consistently underprice, whether that’s bathroom renos, small repairs or anything with access problems, and you can price those with a bigger buffer or turn them down.

How do I put the new rate in front of customers?

Don’t present a bare hourly rate and an apology. Present the job: a fixed price or a range, what it includes, what triggers a variation, and when payments fall due. Customers compare outcomes, not rates. If someone pushes back on price, adjust the scope, not the rate: fewer inclusions, a different finish, a later start. A discount you give on the hourly rate comes straight out of your wage.

When your quotes land at the right number, you’ll lose a few jobs. That’s usually the jobs that would have cost you money.

Priced right, but the cash isn’t there yet?

Good pricing makes a business profitable. It doesn’t make money arrive sooner. If a profitable job leaves you short for the supplier invoice, the wages or the ute repayment, that’s a timing problem, and it’s exactly what we help tradies solve.

A short enquiry takes about 60 seconds, and there’s no credit check when you first enquire, so nothing touches your credit file just for asking and you can find out where you stand before you commit to anything. We don’t send your details to a pile of lenders, so your phone won’t light up. A real person reads your situation and rings you to talk it through. Fill the form in accurately, including turnover and your trade, so we can match the right option first time.

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