You charge what the bloke down the road charges — but your costs might be completely different. Wrong labour rate means working hard for less than employee wages after expenses. None of this requires an MBA — just a few changes you can stick to between jobs.
Why this problem sticks around
You charge what the bloke down the road charges — but your costs might be completely different.
If you are a tradies owner, you already know the craft. The friction is everything around it: enquiries going cold, quotes sitting in draft, jobs overlapping, and admin eating your evenings. Wrong labour rate means working hard for less than employee wages after expenses.
Left unchecked, this costs you booked jobs, slower payments, and the Sunday-night admin sessions nobody signed up for. Fixing it is less about working harder and more about removing friction from the parts customers never see.
What actually works in practice
Annual costs ÷ billable hours = break-even rate. Add profit margin on top. Billable hours are typically 60-70% of total work hours — account for quotes, travel, admin.
Treat this like a job, not a New Year's resolution. Block 30 minutes weekly to review pipeline, cash, and what slipped through the cracks. Small course corrections beat annual panic.
You do not need to rebuild your entire business this week. Start with the first step below, run it on your next job, and adjust from there.
A practical approach you can start this week
1. List all annual business costs
Wages, super, vehicle, fuel, insurance, tools, phone, software, accounting, marketing, rent.
2. Calculate realistic billable hours per year
40-hour week minus holidays, sick leave, training, quotes, travel, admin. Often 1,200-1,400 billable hours/year solo.
3. Divide costs by billable hours for break-even
Break-even might shock you — $85/hour is common for skilled Perth tradies.
4. Add target profit margin — typically 15-25%
Profit funds growth, equipment replacement, and bad debt buffer.
Quick tips for busy tradies
- Review rate annually — CPI and fuel add up
- Minimum call-out fee protects small jobs
- Emergency and after-hours multiples — 1.5x to 2x standard
- Don't compete with unlicensed cowboys on rate alone
- Increase rates on new customers before existing — loyalty pricing optional
Common mistakes to avoid
- Using 40 hours × 52 weeks as billable — fantasy maths
- Forgetting to pay yourself super and tax provision
- Cutting rate to win one job then stuck at that rate forever
How Automate Leads can help
Automate Leads labour costing uses your configured rates in every quote — consistent pricing that reflects your true costs. That is the gap Automate Leads closes — labour costing in quotes without juggling five separate subscriptions.