Mastering Profitable Labor Cost Management for Trades
7 November 2026 · 6 min read · By Heaney Accounting
Many tradies fall into the trap of only considering their hourly rate when quoting. True labor costs involve far more than just the wages you pay your team members or take for yourself.
What makes up your true labor cost?
- Base wages and overtime loading
- Superannuation contributions
- WorkCover premiums
- Payroll tax if applicable
- Unproductive time like travel or maintenance
Pro Tip: If you are not adding a 20-30% buffer to your base labor rate to cover insurance and leave, you are likely losing money on every hour billed.
- Calculate your total annual labor expenditure
- Determine your total billable hours per year
- Divide the expenditure by billable hours
- Add your desired profit margin percentage
Reviewing these numbers once a year ensures that your quotes remain competitive while protecting your bottom line against rising employment costs.
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