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.
This guide walks you through a repeatable, profitable pricing method that works for any NZ trade.
Step 1: Know Your Costs
Before you can price anything, you need to know what it costs you to operate. Most tradies focus on job-level costs but forget about overhead — and that's where the money goes.
Direct Job Costs
These change with every job: - Labour — your time or your employees' time (at their actual cost to you, not what you charge) - Materials — at cost price from your supplier - Subcontractors — at their quoted price - Equipment hire — any hired plant or tools
Overhead Costs (Fixed)
These go on whether you work or not: - Vehicle running costs (estimate monthly, divide by billable days) - Phone, internet, software subscriptions - Insurance (liability, tools, income protection) - Tool maintenance and replacement - Advertising and website - Accounting fees - Yard or workshop rent (if applicable)
Add up your annual overhead and divide by your billable hours/days to get a per-hour overhead rate.
Example: - Annual overhead: $48,000 - Billable hours: 1,600/year - Overhead per hour: $30
Step 2: Calculate Your Labour Cost
Don't just use your hourly wage as your "labour cost" — your real labour cost includes: - Your effective hourly rate (target income ÷ billable hours) - Overhead per hour (from Step 1) - Profit margin
Use the Hourly Rate Calculator to work this out properly.
Example: - Target income: $90,000/year - Billable hours: 1,600/year - Overhead rate: $30/hr - Labour cost: ($90,000 ÷ 1,600) + $30 = $56.25 + $30 = $86.25/hr
Step 3: Estimate Time Accurately
Accurate time estimation is a skill. Common mistakes: - Not including travel time — if you're driving 45 minutes each way, that's 1.5 hours every day - Forgetting setup and cleanup — often 30–60 minutes per day on site - Underestimating complexity — assume things go wrong (they often do) - Missing remediation — patching, painting, making good
Build a 10–15% time contingency into every quote for unknowns.
Step 4: Apply the Right Markup
Markup is the percentage you add above your cost to create your selling price.
Common markup rates: - Labour: 20–30% - Materials: 15–25% - Subcontractors: 10–15%
Use the Markup vs Margin Calculator to ensure you're not confusing markup with margin — a mistake that costs NZ tradies thousands every year.
Step 5: Add GST
All NZ tradie quotes to GST-registered customers should show GST separately.
- Ex-GST price (your subtotal after markup)
- + GST (15%)
- = Total inc GST
Use the GST Calculator or the Job Cost Calculator to automate this.
Step 6: Build Your Quote Document
A professional quote builds trust and wins jobs. Include:
- Your business name, logo, contact details, and GST number
- Client name and address
- Job address
- Quote date and validity period (e.g. "valid for 30 days")
- Clear description of what's included — and what's not
- Itemised breakdown (labour, materials, subcontractors)
- Payment terms (e.g. deposit required, payment on completion, net 7)
- GST breakdown (ex-GST, GST, total inc GST)
Fergus and Tradify both produce professional quotes from your phone in minutes.
Step 7: Follow Up
Don't send a quote and forget it. Follow up after 3–5 days: - "Hi [name], just checking you received our quote for [job]. Happy to answer any questions."
Most tradies never follow up. The ones that do win more jobs.
What's a Healthy Gross Profit Margin?
| Business size | Target gross margin |
|---|---|
| Sole trader | 30–40% |
| Small team (2–5 staff) | 25–35% |
| Medium business (5–20 staff) | 20–30% |
Gross margin = (Revenue - Direct costs) ÷ Revenue × 100
If your gross margin is below 20%, you're not covering overhead and profit. Below 15% and you may be working hard for very little return.
Common Pricing Mistakes to Avoid
- Pricing to win at all costs — some jobs aren't worth having
- Forgetting travel time — it's your time, it has value
- Underpricing materials — add your markup, don't give them away
- No contingency — something always goes wrong
- Confusing markup and margin — see the calculator above
- Not reviewing past jobs — track what you actually spent vs. quoted
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