Blog→How to Price a Job as a Tradie: Labour, Materials and Markup
How to Price a Job as a Tradie: Labour, Materials and Markup
A practical guide to pricing trade jobs correctly — covering hourly rates, material markup, overhead recovery and how to build in profit without pricing yourself out.
PUBLISHED BY INSTA QUOTES
Pricing is the hardest skill in trade. Too high and you lose the job. Too low and you win it but lose money. Here's a framework that most profitable tradies use, consciously or not.
Start with your true cost per hour
Most tradies underprice because they only count their wage. Your actual cost per hour includes:
- Wages or drawings (what you want to take home)
- Superannuation (11.5% of gross from 2025)
- Public liability and other insurance
- Vehicle costs — fuel, registration, loan repayments, maintenance
- Tools and equipment — amortised over their useful life
- Unpaid hours — quoting, admin, travel, sick days, public holidays
- GST compliance, accounting and software
A sole trader who wants to take home $80,000/year, works 1,500 billable hours (not 2,000 — account for the unbillable ones), and has $25,000 in business costs needs to bill at least $70/hr just to break even. Add 20% profit margin and you're at $84/hr minimum.
Compare that to your current rate. Many tradies are surprised.
How to price materials
Buy at trade price, charge at retail — or better, at cost plus a markup of 15–30%. Your markup covers:
- Time spent sourcing, ordering, collecting and delivering materials
- Wastage and offcuts
- Carrying risk while prices move between quote and purchase
- Capital tied up while you wait to be paid
Don't quote materials at cost. You're providing a service — sourcing and managing materials is part of it.
Estimating hours accurately
This is where most underpricing happens. The fix is simple but requires discipline: track actual hours on every job.
Most tradies estimate "about 8 hours" and it takes 11. After 10 jobs, you know that your bathroom tile jobs take 40% longer than you think they will. That knowledge is worth thousands of dollars per year in accurate pricing.
For new job types, build in a buffer of 20–30% until you have data. The client doesn't know your buffer is there, and you're covered if the job takes longer.
Overhead recovery
Overhead is everything you spend to run the business that isn't directly on a job — insurance, accounting, phone, software, website, advertising. Divide annual overhead by annual billable hours and add that to every hour you bill.
Example: $15,000/year overhead ÷ 1,500 billable hours = $10/hr overhead recovery. Add that to your rate.
Profit margin
Profit is not the same as wage. Profit is what's left after all costs, including your own labour at market rate. Aim for 15–25% net profit margin on jobs. Less than 10% and you're exposed to any cost overrun or slow period. Over 30% is sustainable only if you have a clear competitive advantage.
Market rates as a sanity check
Calculate your price from the bottom up (costs + overhead + profit), then check it against market rates. If you're significantly above market, you either have a cost problem or you need to explain your premium clearly. If you're significantly below market, you're probably underpricing.
Market rates vary significantly by state. Sydney and Melbourne labour rates run 15–25% higher than Adelaide or regional Queensland for most trades.
The one thing most tradies get wrong
They price for the job they think they'll get, not the job they might get. A job that looks simple from the outside — a bathroom retile, a switchboard upgrade — often has surprises. Rotted subfloor under those tiles. Wiring that doesn't meet current standards. Price for the realistic job, not the optimistic one.