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WHAT SHOULD YOU CHARGE?

Most tradies who go broke weren’t slow, or bad at the job. They charged a rate that only covered the hours they were standing on site. This works out the rest.

Start from

What you want to pay yourselfFor the year, before income tax

Weeks you actually work46 wks

52 minus annual leave, public holidays and sick days

Hours a week on the business38 hrs

Everything: on the tools, quoting, driving, paperwork

Hours you can't invoice30%

Quoting, travel, wholesaler runs, chasing money

Super you set aside12%

The guarantee rate is 12%

Profit on top15%

What the business keeps after you're paid

Charge at least

$128.55/hr + GST

$141.41/hr on the invoice once GST is added.

You can invoice about 1,224 hours this year, not 1,748. Break even is $109.27/hr , below that you’re paying to work.

Where each hour goes

Your wage$77.64
Super$9.32
Running the business$22.31
Profit$19.28

At that rate the business clears $23,594 a year on top of your $95,000 wage and $11,400 super.

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A guide, not financial advice, your accountant knows your books. Everything is ex-GST and in AUD.

A 38-HOUR WEEK ISN’T 38 BILLABLE HOURS.

This is the number nearly everyone gets wrong. You work 38 hours, so you divide what you need by 38 and call that your rate. But you can’t send an invoice for the two hours you spent writing quotes on Sunday night, or the trip to the wholesaler, or the drive between the Brunswick job and the Coburg one, or the hour on the phone chasing an invoice from six weeks ago.

For most sole traders somewhere between 25% and 35% of the week never makes it onto an invoice. That time still has to be paid for, so it comes out of the hours that do. Take four weeks of leave, a few public holidays and the odd sick day off the year as well, and a 1,976-hour year turns into roughly 1,224 billable hours.

The gap

Want $95,000a year and divide it by 1,976 hours? You’ll set your rate at about $48 an hour and wonder why there’s nothing in the account. The same wage, with super and running costs, over the hours you can actually invoice, needs $109.27 an hour just to break even , and that’s before a cent of profit.

WHAT COUNTS AS A RUNNING COST.

Anything the business pays for whether you work that week or not. Materials you buy for a specific job aren’t in here, those get billed to that job, with a markup. These are the costs that sit underneath everything:

✓The ute: repayments, rego, insurance, fuel, servicing, tyres

✓Public liability, tool cover, income protection

✓Replacing and repairing tools, and consumables you never bill

✓Phone, data, internet

✓Accountant, bookkeeping, bank and merchant fees, software

✓Website, ads, signage, van wrap, lead fees

✓Licence renewals, tickets, training, memberships

✓Storage, yard or shed rent, if you pay it

Add them up for a full year, not a good month. If you’re not sure, pull twelve months of bank statements and total the lot, it’s almost always more than the guess.

MARKUP ISN’T MARGIN.

Markup is what you add to your cost. Margin is what you keep of the price. They’re different numbers, and mixing them up costs real money on every job with materials in it.

Markup	$1,000 becomes	Real margin
10%	$1,100	9.1%
20%	$1,200	16.7%
30%	$1,300	23.1%
50%	$1,500	33.3%

So “I put 20% on materials” is really a 16.7% margin. If you want to keep a true 20%, the markup has to be 25%. The formula: markup = margin ÷ (1 − margin).

QUESTIONS.

What should a tradie charge per hour in Australia?

Most Australian sole-trader tradies need to charge somewhere between $100 and $150 an hour plus GST. On typical numbers, a $95,000 wage, 12% super, about $27,000 of running costs a year, and 30% of the week lost to quoting, travel and paperwork, the rate works out at about $128.55 an hour ex-GST. Your own number depends on your overheads and how much of your week you can actually invoice, which is what the calculator on this page works out.

Why is my charge-out rate so much higher than the wage I want?

Because you only get paid for some of the hours you work. A 38-hour week is rarely more than 26 or 27 billable hours once you take out quoting, driving between jobs, trips to the wholesaler, invoicing and chasing money. Those hours still have to be paid for, so they come out of the hours you do invoice. Add super, your ute, insurance and tools, and a $95,000 wage needs about $109.27 an hour just to break even.

How many billable hours are there in a year?

About 1,200 for a typical sole trader, not the 1,976 you'd get from 52 weeks at 38 hours. Take out four weeks of annual leave, public holidays and a few sick days and you're down to roughly 46 working weeks. Take out the 25–35% of each week that never makes it onto an invoice and you land near 1,224 billable hours.

Do I add GST on top of my hourly rate?

Yes, if you're registered for GST. Registration is compulsory once your turnover hits $75,000 a year. Quote and think in ex-GST rates, then add 10% on the invoice. The GST is never yours, you're collecting it for the ATO, so don't let it flatter your rate.

What's the difference between markup and margin?

Markup is what you add to your cost; margin is what you keep of the price. They are not the same number. Putting 20% markup on materials gives you a 16.7% margin, not 20%. To actually keep a 20% margin you need a 25% markup. Getting these two the wrong way round quietly costs a trade business thousands a year on materials.

Should I charge by the hour or quote a fixed price?

Quote fixed prices, but build them from an hourly rate you trust. Customers prefer a number they can say yes to, and a fixed price rewards you for being fast instead of punishing you for it. You still need an accurate charge-out rate underneath, otherwise you're guessing at every quote.

How often should I review my rate?

Once a year at minimum, and any time your costs jump, a new ute, an insurance renewal, or a rise in what your suppliers charge. Most tradies who undercharge aren't cheap on purpose; they set a rate years ago and never went back to it.

NOW MAKE EVERY QUOTE USE IT.

Knowing your rate only helps if every quote actually uses it. Put your numbers into an Agentize rate card and the Quoter prices every job off them, from a voice note, in about two minutes. It never invents a price, if it can’t price a line from your rates, it leaves it blank and tells you.