How to Price Your Trade Jobs for Profit (Not Just Revenue)

Busy and Broke: The Tradie Trap

It’s one of the most common situations in the trades: you’re booked solid for weeks, but at the end of the month there’s barely anything left in the account. You’re working harder than ever but it doesn’t feel like it’s getting you anywhere.

The problem is almost always pricing. Many operators mistake high revenue for profitability. In this article, we outline a structured pricing methodology designed to protect your gross margins.

Start With Your True Costs

Before you can price for profit, you need to know what it actually costs you to complete a job. Most tradies underestimate this because they only count materials and their own direct time.

Identifying Overhead Expenses

Your business has fixed and variable costs that must be covered by your billable hours. These include:

• Vehicle Maintenance: Servicing, fuel, tires, and depreciation.
• Tools & Safety Gear: Replacement of broken tools, testing equipment calibration, and PPE.
• Insurance & Admin: Public liability insurance, workers’ comp, professional licensing, bookkeeping services, and software subscription fees.
• Unbillable Hours: Time spent traveling, quoting, writing up safety risk assessments, and doing general administrative work.

The Three-Part Pricing Formula

To ensure consistency and margin protection, use the following pricing equation:

Job Price = Material Costs + (Labour Hours × True Hourly Rate) + Overhead Allocation

1. Material Costs (Cost Plus Markup)

All materials should carry a markup (typically 15% to 30%) to cover the time spent purchasing, picking up, and transporting them to the job site.

2. True Hourly Rate

Your True Hourly Rate is calculated by determining your target annual salary plus desired net profit, divided by your actual billable hours (not total working hours).

3. Overhead Allocation

Add a proportional percentage to every job to cover the monthly fixed overhead expenses calculated in your business budget.

Review and Adjust Quarterly

Costs are dynamic. Cable costs, fuel prices, and insurance premiums fluctuate throughout the year. Review your margins every three months and adjust your pricing templates accordingly.

Estimate Your Own Hourly Rate Requirements

Use our interactive calculator below to determine what your business needs to invoice: