Pricing a job so you actually make money

Most quotes that lose money aren't priced carelessly. They're priced off a number the business has been using for years, which was arrived at by looking at what the bloke down the road charges. That number covers labour and materials. It usually doesn't cover the other four things, and the gap only shows up at tax time.

Start with the hours you can actually sell

This is the number almost everyone gets wrong, and it moves everything else.

A full-time year is roughly 52 weeks at 38 hours — call it 1,976 hours. You cannot sell all of them. Take out annual leave, public holidays, sick days, and then take out the part of every week that goes on quoting, invoicing, chasing payment, buying materials, servicing the vehicle and driving between jobs.

What's left is your chargeable hours. For a lot of small trades businesses it lands somewhere well under 60% of the total. Work out your own figure honestly — look at last month's timesheets or job records rather than estimating, because the estimate is always optimistic.

Then work out what an hour of labour really costs

The wage is the start of it, not the end. For an employee, add:

• Superannuation
• Payroll tax, if your wages bill is over your state's threshold
• Workers compensation insurance
• Annual leave, leave loading, sick leave and public holidays — you pay for those hours and sell none of them
• Allowances your award requires — travel, tools, site allowances
• Training and licence renewals

For yourself, the equivalent is what you need to draw, plus your own super, plus the income-protection cover nobody has until they need it.

Divide the annual total by your chargeable hours. That is the cost of putting one person on one job for one hour, and it is the floor — you have not made a cent yet.

Overhead: the costs that exist whether you work or not

Rent or shed costs. Vehicle payments, fuel, rego, servicing, tyres. Public liability and professional indemnity. Phone and internet. Software. The accountant. Licence and association fees. Advertising. Tools and consumables that aren't billed to a specific job.

Total them for a year, divide by chargeable hours, and you have an overhead rate per hour. Add it to your labour cost. Now you know your true cost of an hour.

Materials, with waste and with handling

Two things get missed on materials.

Waste. You buy a full length and use two thirds. You buy a box of fittings and the job needs seven. The offcuts are a real cost. Build a waste allowance into the material line rather than absorbing it.

Handling. Someone sourced those parts, drove to the supplier, carried them, and will carry the leftovers back. That time is either in your chargeable hours calculation or it is in a markup on materials, but it has to be somewhere.

Travel

Either you bill it, or you have already accounted for it by excluding driving time from your chargeable hours. What you must not do is both — or neither. Neither is the common one: driving is excluded from chargeable hours and not billed, so it vanishes.

Margin is not markup

These get used interchangeably and they are not the same, which is how a business that thinks it makes 30% makes 23%.

• Markup is a percentage added to cost. Cost $100, marked up 30%, sells for $130.
• Margin is the profit as a percentage of the sale price. That same $130 sale has a margin of about 23%, not 30%.

To hit a target margin, divide rather than multiply. For a 30% margin on a $100 cost: $100 ÷ (1 − 0.30) = $142.86.

Putting it together

A quote that holds up has five components, in this order:

1. Labour hours × true labour cost per hour
2. Plus overhead recovery — hours × overhead rate
3. Plus materials, including waste
4. Plus travel, if you bill it separately
5. Plus your margin, calculated by dividing, not multiplying

Then GST on top, and the invoice has to show it — see what the ATO expects on a tax invoice.

The two habits that keep this honest

Record what the job actually took

A quote is a prediction. The only way to get better at predicting is to compare it against what happened — hours actually worked, materials actually used. Do that for twenty jobs and your quoting gets noticeably sharper.

Re-run the numbers once a year

Insurance goes up. Fuel moves. Wages move. Your rate was right eighteen months ago and quietly isn't now. Put it in the calendar.

Where the software helps

BizzMate records labour hours and materials against the job as the work happens, from the technician's phone, and carries them into the invoice. That closes the loop between what you quoted and what it cost — which is the only data that makes the next quote better.