Most tradies pick a number that sounds about right, or match what the last bloke charged. Then they wonder why there's nothing left at the end of the month. Your rate isn't a guess, it's a calculation, and it's worth getting right, because every job you quote runs off it.
Charge-out rate ≠ what you 'earn'
The number you charge a customer per hour has to cover a lot more than the wage you want in your pocket. It has to pay for the hours you can't bill (quoting, driving, chasing invoices, buying materials), your tools and vehicle, insurance, super, fuel, phone, admin, and leave a profit on top. If your charge-out rate only covers your wage, you're running at a loss and calling it a busy week.
A simple way to work it out
- 1Decide the annual income you actually want to take home.
- 2Add your yearly business costs, tools, vehicle, insurance, phone, software, materials you don't on-charge, super.
- 3Add a profit margin on top (the business should make money, not just pay you a wage).
- 4Divide by your billable hours, and be honest: of a 40-hour week, maybe 25–30 are actually billable once you take out quoting, travel and admin.
That last step is where most people go wrong. If you divide by 40 hours instead of the ~28 you can really bill, your rate comes out 30% too low, and you feel it every quarter.
Then sanity-check it
Compare your number to what's normal for your trade and area, not to copy it, but to make sure you're not wildly off. If your worked-out rate is higher than the going rate, that's usually a sign you need to be more efficient or charge for the unbillable hours differently (call-out fees, minimum charges), not that you should drop your price.
The hard part is raising it, not setting it
Working out the number takes twenty minutes. Charging it to the customers who've had your old rate for three years is what actually stops people. So separate the two jobs: get the number right first, then decide who moves to it and when.
New customers go on the new rate immediately, starting with your next quote. There's nobody to tell and nothing to justify, and within a couple of months most of your work is at the right price without a single awkward conversation.
Telling the regulars
Give them notice, keep it short, and don't apologise for it. A rise once a year is normal and expected, and everyone your customers deal with does it. What makes it uncomfortable is going five years without one and then needing 30% in a single jump.
- Tell them before they see it on a quote, not after.
- Give a date it starts, not a vague 'from soon'.
- One line on why is plenty: costs have moved. Don't build a case, it invites a negotiation.
- Don't offer an exception unprompted, or the rate isn't real.
Some will push back. A few will leave, and it's almost always the ones who haggled every invoice and paid late anyway. Losing the bottom slice of your customer list while everyone else pays more is not a bad month, it's the whole point.
Every year you don't raise your rate is a pay cut you gave yourself.
Protect your rate with a rate card
Once you know your number, lock it into a rate card, your call-out fee, hourly rate, and priced line items for the jobs you do most. Quote from that every time. It stops you underquoting on the fly, and it makes every quote consistent.
Where Agentize fits
Agentize is built around your rate card. You set your numbers once, and every quote is priced from them automatically, never invented, never rounded down to win a job you'll lose money on. Plans from $49 a month, cancel any time.