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What Should I Charge?
Work backwards from your real costs and the margin you need to see what you should charge. Use your own numbers. No email required.
Your result
Enter your figures to see your result straight away. Nothing is sent anywhere.
BuzzBrain Time Boost works out the true cost of each job before you quote, keeps quotes moving and shows what each job actually made. Free during private beta testing on iPhone and iPad.
See BuzzBrain Time Boost →How it's worked out
The calculator adds up your costs, then works out the price that delivers the margin or markup you chose. Everything is ex-GST until the final GST figure.
- Cost baseLabour cost + materials + vehicle and travel + machinery + other direct costs + any overhead allowance
- Price using a target marginCost base ÷ (1 − margin %)
- Price using a target markupCost base × (1 + markup %)
- Profit built inPrice ex-GST − cost base
- Resulting margin and markupProfit ÷ price, and profit ÷ cost base
- Price including GSTPrice ex-GST × 1.10
A margin must be less than 100%, because profit can never be the whole price.
Worked example
A tiler pricing a bathroom floor expects 6 hours of labour costing the business $55 an hour, $420 of tiles and adhesive, $45 travel, $35 waste disposal, and allows $120 towards overheads. They want a 30% profit margin.
| Labour (6 h × $55) | $330 |
|---|---|
| Materials | $420 |
| Vehicle and travel | $45 |
| Other direct costs | $35 |
| Overhead allowance | $120 |
| Target margin | 30% |
| Cost base | $950.00 |
|---|---|
| Price ex-GST | $1,357.14 |
| Price incl. GST | $1,492.86 |
| Profit built in | $407.14 |
| Resulting markup | 42.9% |
A 30% margin is the same as a markup of about 42.9% on these costs.
Assumptions
- All costs and the calculated price are excluding GST. GST at 10% is shown separately and only applies if you're registered for GST. GST is not profit.
- Labour cost means what the labour costs your business, including on-costs, not your charge-out rate.
- Overheads are only included if you enter an overhead allowance. Income tax is not included.
- Material and supplier prices change, so review your costs before each quote.
- The calculator doesn't suggest a 'right' margin or markup. The target is yours to decide.
- The price is calculated from your inputs. It isn't a guarantee of profit, or accounting or financial advice.
This calculator works out a price from the costs and target you enter. It is a practical guide, not a guarantee of profit, or accounting, tax or financial advice.
FAQ
What Should I Charge? questions. Answered.
What's the difference between margin and markup?
Markup is profit as a percentage of cost; margin is profit as a percentage of the price. $100 cost with a 25% markup gives a $125 price, which is a 20% margin. To get a 25% margin on $100 cost, you'd need to charge $133.33.
Why can't I enter a 100% margin?
Margin is profit divided by the price. Profit can never be the whole price unless the job costs nothing, so a margin must be below 100%. Markup has no such limit.
Should I enter costs including or excluding GST?
Excluding GST. GST you collect is passed on to the ATO, so it isn't income or profit. The calculator adds 10% GST at the end as a separate customer price.
What margin should I use?
That depends on your business, your overheads and your market, so the calculator doesn't recommend one. Many businesses test a few targets to see how the price changes.
Why use labour cost instead of my hourly rate?
Your charge-out rate already includes profit. Using what labour actually costs you keeps profit from being counted twice.
Does this include overheads and tax?
Overheads are only included if you add an overhead allowance. Income tax is never included.
Your next step
BuzzBrain Time Boost
BuzzBrain Time Boost works out the true cost of each job before you quote, keeps quotes moving and shows what each job actually made. Free during private beta testing on iPhone and iPad.
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