Pricing a job wrong is the fastest way to go broke as a tradie. Too high and you lose the quote. Too low and you win the job — but make nothing, or worse, lose money.
Most tradies who underprice aren't stupid — they're using the wrong method. They estimate materials, add an hourly rate, and submit. What they forget is overhead, non-billable time, slow periods, and the gap between what they charge and what they actually keep.
This guide walks you through a repeatable, profitable pricing method that works for any NZ trade.
Why Most Tradies Underprice
Before getting into the steps, it's worth understanding why underpicing is so common:
They only think about take-home pay. A tradie who wants to earn $1,500 per week thinks "I need to bill 40 hours at $37.50/hr." But $1,500/week take-home is after income tax (up to 33%), ACC levies (3–5%), and KiwiSaver. The hourly rate needed to actually take home $1,500/week is closer to $55–$65/hr before you've covered a single dollar of overhead.
They forget non-billable time. Every week has quoting, admin, supplier runs, travel, tool maintenance, and follow-ups. A 40-hour week typically delivers 28–32 billable hours, not 40. Your hourly rate needs to cover all 40 hours of time, not just the 32 you bill.
They don't count overhead. Vehicle running costs, insurance, accounting fees, phone, software — these go on whether you're billing or not. They need to be priced into every job.
They're scared of losing the job. Underpricing to win work feels safe but creates a business that's always busy and never profitable.
Step 1: Know Your True Cost Per Billable Hour
This is the foundation. If you don't know this number, you're guessing on every quote.
Calculate your target income first: What do you need to take home each year? Include tax, ACC, KiwiSaver, and a buffer for sick days and quiet periods. For most NZ tradies, if you want $75,000 take-home, you need roughly $105,000–$115,000 in pre-tax earnings.
Calculate your realistic billable hours: Most sole traders work 46–48 weeks per year (after annual leave and public holidays). Of those, you'll typically bill 70–80% of your time — the rest is admin, quoting, travel between jobs, and slow days.
46 weeks × 5 days × 8 hours = 1,840 available hours At 75% billable: 1,380 billable hours per year
This is the number everything else is based on.
Your labour component per hour: $115,000 target income ÷ 1,380 billable hours = $83.33/hr
This is just your labour component — before overhead and before margin.
Use the Hourly Rate Calculator to run these numbers for your specific situation.
Step 2: Calculate Your Overhead Rate
Overhead is every business cost that isn't directly tied to a specific job. It doesn't go away when you're not billing.
Common overhead costs for NZ tradies:
| Cost | Annual estimate |
|---|---|
| Vehicle (fuel, insurance, registration, WOF, servicing) | $8,000–$15,000 |
| Vehicle depreciation (20% DV on $40k ute) | $8,000 yr 1 |
| Public liability insurance | $600–$1,500 |
| Tool and equipment insurance | $400–$900 |
| Phone and internet | $1,500–$2,400 |
| Accounting fees | $900–$1,800 |
| Job management software | $600–$1,800 |
| Advertising and website | $500–$2,000 |
| Tool replacement (annual average) | $1,500–$3,000 |
| Trade memberships and licences | $400–$800 |
| Total typical overhead | $22,000–$38,000 |
Divide your total annual overhead by your billable hours:
$30,000 overhead ÷ 1,380 billable hours = $21.74/hr overhead cost
Your minimum viable rate before margin: Labour component ($83.33) + Overhead ($21.74) = $105.07/hr — just to break even
Any rate below this and you're going backwards. Add your profit margin on top.
Step 3: Build Your Quote from the Bottom Up
Every job quote should be built from these components:
Labour
Hours estimated × your full cost-per-hour rate (labour + overhead).
Always add a time contingency: Build in 10–15% extra for unknowns — unexpected access issues, non-standard fixings, weather delays, discovery of additional problems. Tradies who don't add contingency find they're giving free labour on every job that hits a snag.
Materials
Cost price from your supplier — never guess. Get the actual price, include delivery if applicable, and include your markup.
Materials markup for NZ tradies typically runs 15–25%. This covers: - Your time to source and order materials - Delivery and handling - Wastage and over-ordering (tile cuts, offcuts, breakage) - Risk of price changes between quoting and purchasing
A 20% markup on $5,000 of materials adds $1,000 to the job — that's legitimate profit for real work done managing the materials.
Subcontractors
If you're hiring other trades for part of the job, mark their cost up by 10–15% for coordination, scheduling, and liability. You're responsible for their work quality — that's worth something.
Equipment Hire
At cost plus a small handling margin (5–10%). If you're hiring a concrete pump or scissor lift, organising it and being responsible for its use takes time.
Step 4: Apply Your Profit Margin
Gross margin (revenue minus direct job costs) is different from your hourly rate margin. You need both.
Target gross margins by trade type:
| Situation | Target gross margin |
|---|---|
| Sole trader — all trade work | 35–50% |
| Small team (2–5 staff) | 25–40% |
| Larger business (5–20 staff) | 20–32% |
| High-risk or specialist work | 40–60% |
Gross margin = (Job revenue − Direct costs) ÷ Job revenue × 100
If a job costs you $4,000 in labour and materials and you charge $6,000, your gross margin is 33%. After overhead ($800 allocated to this job), your net margin is 20%.
Gross margins below 25% leave almost no room for overhead and profit. Many tradies running at 15–20% are effectively working for wages — and often less than a good employee would earn.
Step 5: Add GST Correctly
If you're GST-registered, add 15% to your subtotal after all other components:
| Component | Amount |
|---|---|
| Labour (25 hours × $130/hr) | $3,250 |
| Materials (cost + 20% markup) | $1,800 |
| Subcontractor (cost + 10%) | $550 |
| Subtotal (excl. GST) | $5,600 |
| GST (15%) | $840 |
| Total (inc. GST) | $6,440 |
The $840 GST is collected on IRD's behalf — it's not your income.
Use the Job Cost Calculator to build this automatically.
Step 6: Write a Winning Quote Document
The quote document itself is part of the sale. A professional, detailed quote builds trust and reduces haggling over price.
What every NZ tradie quote should include:
- Your business name, logo, and contact details
- GST number (if registered)
- Client name and job address
- Quote date and validity period ("this quote is valid for 30 days")
- Clear scope of work — what IS included
- Explicit exclusions — what is NOT included
- Allowances and PC sums — where costs may vary
- Itemised breakdown (labour, materials, subcontractors — even approximate)
- Payment terms (deposit, progress payments, final payment)
- GST breakdown (excl. GST, GST amount, total inc. GST)
- Your variation clause: "Any work not described above will be quoted separately and approved in writing before proceeding"
Download our free NZ Tradie Quote Template to have all of this pre-formatted.
Tools like Fastcrew let you build quotes on your phone on-site, pull through previous job costs, and send them immediately — so the client gets a professional quote while you're still at the property.
Step 7: Price by Market Rate, Not Just Cost
Your cost-based price is your floor. But market rates set your ceiling — and sometimes your floor is too low.
Current NZ tradie hourly rates (2026):
| Trade | Auckland | Wellington | Christchurch | Regional |
|---|---|---|---|---|
| Builder/LBP | $90–$130 | $85–$120 | $80–$115 | $70–$100 |
| Electrician | $100–$150 | $95–$140 | $90–$130 | $75–$110 |
| Plumber | $110–$160 | $100–$150 | $95–$140 | $80–$120 |
| Painter | $55–$85 | $55–$80 | $50–$75 | $45–$70 |
| Roofer | $80–$120 | $75–$115 | $70–$110 | $65–$95 |
If your cost-based rate comes out at $85/hr and the Auckland market rate for your trade is $110–$130/hr, you have room to charge more. Under-charging the market doesn't win you better clients — it attracts price-sensitive clients who will push you harder on every job.
Follow Up Every Quote
Most tradies send a quote and wait. The ones who win more jobs follow up.
Three to five days after sending, call or text: "Hi [name], just checking you received our quote for [job]. Happy to walk through anything or answer questions."
Most tradies never do this. In a market where clients often have 3–4 quotes sitting in their inbox, a quick follow-up call is enough to get a decision — and more often than not, the decision goes to the tradie who followed up.
Track Your Job Profitability
Pricing is only part of the equation — you also need to know how your actual job costs compare to what you quoted. Most tradies never check.
Use your job management system to record: - Hours actually spent vs estimated - Materials used vs quoted allowance - Any variation work completed and billed
Jobs that run over time or over materials are telling you something: either your estimating is off, or something changed during the job (which you should have a variation order for).
Review your last 10 jobs. If half of them went over on time or materials, your estimating needs adjusting — or your variation process does.
Common Pricing Mistakes to Avoid
- Pricing to win at all costs — some jobs aren't worth having. Saying no to underpaying work is a legitimate business strategy.
- Forgetting travel time — if you're driving 45 minutes each way, that's 90 minutes per day that has to be covered somewhere.
- Not marking up materials — materials have a real cost to manage; give them away at cost and you're funding the client's project with your time and risk.
- No contingency — something always goes wrong. Build it in.
- Confusing markup with margin — see the Markup vs Margin Calculator.
- Not reviewing past jobs — if you're not tracking actuals against quotes, you're flying blind.
- Underpricing to build relationships — clients who got a below-market price last time will expect it next time. You've set the anchor.
Frequently Asked Questions
How do I handle a client who says my quote is too high? Ask what their budget is — sometimes it's a misunderstanding about what's included. If they genuinely want a cheaper job, show them what you'd remove from scope (rather than just cutting your price). Never reduce your margin without reducing the scope.
Should I show a detailed breakdown or just a total? Detailed breakdowns give clients things to argue with ("why is labour so much?"). A line-item summary (labour, materials, subcontractors, total) is usually enough. Reserve full breakdowns for commercial clients who require them by contract.
How long should a quote be valid for? 30 days is standard for most residential work. In periods of rapid material price changes (as NZ has seen in 2024–26), 14–21 days is more appropriate. Always state the validity period clearly.
What's the difference between a fixed price quote and a cost-plus contract? A fixed price quote is binding — you complete the work for that amount regardless of actual costs (subject to approved variations). Cost-plus means the client pays actual costs plus an agreed margin. Fixed price suits well-defined scope; cost-plus suits unknown or variable scope.
NZ Tradie Tools provides free calculators, templates, and guides for New Zealand tradies. Use our Job Cost Calculator, Hourly Rate Calculator, and free Quote Template to price every job with confidence.