How Much Should I Charge for a Job in Australia?

What should you consider when pricing a job?

Before deciding on a final price, consider all of the costs involved in completing the work. A price that covers only your obvious costs can still leave you making little or no profit.

1. Labour

Estimate how much time the job will take and work out the labour cost involved. This can include your own working time as well as the cost of employees or contractors working on the job.

Remember that not every hour you spend running a business is an hour you can charge directly to a customer. Time spent quoting, travelling, purchasing materials, doing administration and handling other business tasks can also affect the rate your business needs to charge.

2. Materials

Calculate the materials required for the job and account for their cost when setting the price.

If appropriate, list materials separately in your quote. This makes it easier for the customer to understand what is included in the price.

3. Travel and other job costs

Depending on the job, you may have costs associated with travel, delivery, equipment hire, disposal, subcontractors or other services.

Decide whether these costs will be listed separately or included in the overall price of the job.

4. Business overheads

Your business has costs that may not belong to one particular job but still need to be covered by your revenue. Examples can include insurance, vehicle costs, tools and equipment, accounting, software, rent, advertising and administration.

If your prices do not contribute towards these costs, it can be difficult for the business to remain profitable even when you are busy.

5. Profit

Your price should allow the business to make a profit after covering its costs. Profit is not the same as simply paying yourself for the hours worked.

The amount of profit you aim for can depend on your business goals, market, risks and costs.

6. GST

If GST applies to your business and the transaction, make sure your pricing accounts for it and clearly show the relevant amounts on your quote.

GST registration and obligations depend on your circumstances. If you are unsure how GST applies to your business, check the current guidance from the Australian Taxation Office

A simple way to calculate your job price

A basic pricing calculation can help you make sure the main costs of the job have been considered.

Job price = labour + materials + other job costs + overhead allocation + profit

GST may then need to be accounted for depending on your business and the transaction.

Example

Imagine a job requires 6 hours of labour at $90 per hour, $180 of materials and $50 of other job costs.

The direct job costs would be:

• Labour: $540
• Materials: $180
• Other job costs: $50
• Direct job costs: $770

The final price should also account for the business's overheads and desired profit. The example is intended to show how the calculation works, rather than suggest a standard Australian hourly rate or profit margin.

How to work out your hourly rate

If you charge by the hour, your hourly rate needs to contribute towards more than just the time you spend physically working on a customer's job.

Consider your expected annual business costs, the income you need, the number of hours you can realistically bill and the profit you want the business to generate.

For example, a business may have time each week that is spent travelling, quoting, ordering materials, doing administration or dealing with customers. Those hours still have a cost even though they may not appear as billable hours on a customer's quote.

This is why simply looking at what another business charges per hour may not give you an appropriate rate for your own business.

Should you charge by the hour or by the job?

Both approaches can work. The right option depends on the type of work and how predictable the job is.

Charging by the hour

An hourly rate can work well when the amount of work is difficult to predict or when the job naturally depends on the time required.

Fixed-price jobs

A fixed price can make the customer's expected cost easier to understand before the work begins. It can also reward efficient work when you have a good understanding of the scope.

If you provide a fixed-price quote, clearly describe what is included and explain how additional work or variations will be handled.

For more information about preparing a quote, see our guide to writing a quote in Australia .

How to avoid undercharging

Undercharging can happen when a business looks only at the obvious costs of a job and forgets about the other costs of operating the business.

Include all relevant costs

Think beyond labour and materials. Consider travel, equipment, subcontractors, disposal, administration and your share of ongoing business overheads.

Don't forget non-billable time

Quoting, travelling, purchasing materials, bookkeeping and customer communication can all take time without appearing as separate line items on a quote.

Review your prices regularly

Costs can change over time. Reviewing your prices can help make sure they still cover your expenses and support the profit you need.

How much should I charge compared with competitors?

Competitor prices can be useful when researching your market, but they should not be the only factor you use to set your prices.

Two businesses can have very different costs, experience, equipment, service levels and operating models. A price that works for one business may not be profitable for another.

Use market prices as one source of information, then check whether your own price covers your costs and reflects the value of the work you provide.