What It Actually Costs to Open Your Van Door: Building a Real Hourly Rate From Your Own Numbers

Busy and profitable are two different measurements. Busy is measured in jobs booked. Profitable is measured in what each billed hour recovers against what the whole operation costs to run. Quoting often starts from a feeling. You know roughly what a hot water swap goes for around here, you know what the last bloke charged, and you land somewhere near that. The number is set by the market's memory rather than by your cost base. The cost base does not care what the job feels like it should cost. It keeps ticking whether or not you priced for it. A post on r/Plumbing, written by someone who grew up watching his father run a water treatment company and who now sells a fix for the problem, described the moment of finding out: "Good businessman, always busy but when we actually looked at what it cost to send a truck out the door every day the number was higher than either of us expected." That gap is the whole issue. If the real cost of a truck-day is higher than the rate assumes, every extra job makes the shortfall bigger, not smaller. Growth accelerates the problem. You work more Saturdays and the account balance does not move. A business can be flat out and still be selling hours below cost. Volume hides it because cash keeps arriving. It shows up when the quiet month lands and the buffer is not there.

Total shop time is every paid hour your team is on the clock. Billed time is the hours a customer actually pays for. The gap between them is the single number that changes your rate. Time on the tools at the job is both on the clock and on an invoice. Driving between jobs, supply house runs, site visits to quote, chasing customers for approval, returning to fix a callback, toolbox talks and compliance training are all on the clock and almost never on an invoice. Every one of those is a cost you are already paying. It sits in wages, fuel and super regardless. The only question is whether your hourly rate collects it back. If a tradesperson is paid for eight hours and bills five, the rate on those five hours has to carry all eight. That is not a markup, it is arithmetic. This is also why quoting feels so hard early on. As one new sparkie put it on r/electricians: "New electrician here and finding quoting a bit hard. Don't want to give a crazy expensive price but also don't want to undershoot." The fear is real, but it is the fear of guessing. Once the rate comes out of your own utilisation figure, the price stops being a nervous guess and becomes a number you can defend on the phone.

Work it in four steps, using twelve months of real data out of Xero or MYOB rather than last month's feeling. Step one, total the annual cost of the business: wages and super for every person on the tools, your own wage at what you would have to pay someone to replace you, plus vehicles, fuel, rego, insurance, tools, consumables, phones, software subscriptions, accounting, rent, marketing and admin wages. Step two, count sellable days: start at 365 and take out weekends, public holidays, annual leave, sick leave, training days and days the van is off the road. What is left is what you can actually sell. Step three, find your real billed hours: for each sellable day, how many hours land on an invoice? Pull that from ServiceM8, Tradify or simPRO job records rather than estimating, and compare invoiced hours against payroll hours for the same period. The gap between the two is the number you are after. Step four, divide: total annual cost divided by total annual billed hours is your break-even rate. Your charge-out rate is that number plus the margin you want to keep. The output is not a price list. It is a floor. Below that number you are paying for the privilege of doing the work.

Worth testing the pricing before blaming the tax. An owner on r/ausbusiness, running an on-site IT support company rather than a trade business, laid out the numbers plainly: "We make about $1m in sales which sounds good on paper. Realistically i only ever see $30k a year into my pocket after being taxed to shit." The reply underneath is the part worth pinning above the desk, also from r/ausbusiness: "You're blaming taxes, but your business hasn't paid any taxes. BAS is GST and PAYG. That's not tax your business pays, it's tax it collects from your customers and your employees on behalf of the ATO." GST is collected on top of your price and held for the ATO. PAYG withholding is your employees' tax, taken out of wages you already owe them. Neither is a cost of doing business. If BAS time hurts, it usually means that money was spent on operating costs before the due date, which means the operating costs were larger than the pricing assumed. To be fair to the counter-argument, tax and compliance genuinely are a load on a small business. Super, insurance premiums and workcover are real costs. But they are cost inputs to your rate, not an explanation for a thin margin. A rate built from your full cost base already contains them. A rate built from what the job feels like it should cost does not. Source for how BAS works: ATO, Business activity statements, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/business-activity-statements-bas

Not maths. Data collection. Job costing only works if materials, hours and travel land against the right job. In practice they scatter. Blokes buy on the trade account and the docket never gets coded. Hours get written on the back of a docket and typed in on Sunday night. A callback gets done as a favour and never recorded as a cost at all. The result is a general materials expense bucket that tells you nothing about which jobs made money. You cannot see which work to price up and which work to stop taking. This is a workflow design problem rather than a dashboard problem. Supplier invoices parsed and matched to a job number automatically, with anything unmatched pushed back to the buyer the same day. Timesheet gaps flagged when payroll hours and invoiced hours diverge past a threshold you set. Quote-to-approval time tracked, so you can see how many unbilled hours are sitting in chasing. A weekly one-pager showing billed hours over paid hours per person. None of that is exotic. It is plumbing between the systems you already pay for. The reason it usually does not exist is not technical difficulty. It is that nobody in the business owns it.

Someone on your payroll, not a monthly retainer. An outside agency can build the reporting. The problem is month seven, when the supplier changes their invoice format or a new apprentice starts coding materials differently. The flow quietly breaks. Nobody notices until the numbers stop reconciling, and by then the habit of trusting them is gone. The durable skill here is not building the integration. It is diagnosis and process mapping: being able to look at a broken flow, work out where the data stopped, and fix it. That skill belongs with the person who already knows why the Tuesday dockets look different. That is the idea behind buildAutomation. Two or three of your own people learn to build and maintain the flows that produce your numbers, so the reporting outlives whoever set it up. The cost model of your business is too important to rent.

**How many billable hours a year should I assume per tradesperson?** Do not assume. Measure invoiced hours against payroll hours for the last twelve months in your job management system. The figure will sit below your paid hours once travel, quoting and callbacks are excluded. Use your measured number, not an industry rule of thumb. **Should the owner's wage be in the hourly rate calculation?** Yes. Include what you would have to pay a replacement to do your job, at market rate. If your rate only covers the staff and not you, the business is funding itself out of your income. That is one way turnover grows while take-home does not. **Does charging for travel time lose you jobs?** Sometimes. The alternative is absorbing it silently in a rate that is too low. Either build travel into the hourly rate, add a call-out fee, or set zone pricing. What does not work is pretending the drive is free when you are paying wages and fuel for it. **Is BAS actually costing my business money?** No. GST is collected from customers and PAYG withholding comes out of employee wages. Both are held on behalf of the ATO. If paying BAS hurts cash flow, the money was spent before the due date, which points at margin and cash separation rather than tax. Source: ato.gov.au. **What is the fastest way to find where the margin is going?** Compare payroll hours to invoiced hours for one month, by person. The gap gives you the unbilled hours you are funding. Then check whether supplier dockets are coded to jobs. Those two checks show you where the leak is before you touch pricing. **Do I need new software to job cost properly?** Usually not. If you already run Xero or MYOB alongside a job management system such as ServiceM8, Tradify or simPRO, the failure is normally in the handoff between them rather than in either product. Fix the handoff before you consider migrating platforms.

Voice-of-customer quotes are reproduced verbatim from public Reddit threads and attributed to the subreddit only: r/Plumbing, r/electricians and r/ausbusiness. External source cited: Australian Taxation Office, Business activity statements, https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/business-activity-statements-bas. No client case studies, survey results or statistics beyond the cited ATO guidance are used in this article.