How to Price Your Services: The Ultimate Guide for NZ Tradies

Pricing is the #1 struggle for new tradies. Charge too little, you go broke. Charge too much, you lose jobs.

So how do you find the sweet spot?

In this guide, we'll show you exactly how to price your services profitably - whether you're a plumber, electrician, builder, or any other trade in New Zealand.

The Two Pricing Models: Hourly vs Fixed Price

Hourly Rate Pricing

How it works: You charge by the hour. Simple.

Example: "$95 per hour for plumbing work. Job took 3 hours = $285"

Pros:

• ✅ Easy to calculate
• ✅ Fair if job takes longer than expected
• ✅ Good for unpredictable jobs

• ❌ Customers worry about time padding
• ❌ You're not rewarded for working efficiently
• ❌ Hard to compare quotes (customers don't know hours)

• Emergency call-outs
• Small repairs
• Diagnostic work
• Jobs where scope is unclear

Fixed Price Pricing

How it works: You quote one price for the whole job, regardless of time.

Example: "Hot water cylinder replacement: $2,500 (all-inclusive)"

Pros:

• ✅ Customer knows exact cost upfront
• ✅ You're rewarded for efficiency
• ✅ Easier to compare quotes
• ✅ Higher perceived value

• ❌ Risk if job takes longer than expected
• ❌ Requires good estimating skills
• ❌ Harder to justify price increases mid-job

• Standard jobs you do regularly
• Large projects
• Jobs with clear scope
• Competitive quote situations

How to Calculate Your Hourly Rate

The formula most tradies get wrong:

❌ "I want to earn $50/hour, so I'll charge $50/hour"

Why that's wrong: You're not working 40 billable hours per week. You spend time on:

• Quoting jobs
• Traveling
• Admin/paperwork
• Buying materials
• Waiting for suppliers
• Chasing payments

Step 1: Calculate Your Target Annual Income

What you want to take home:

Desired salary: $70,000/year

Step 2: Add Business Expenses

Annual expenses to cover:

Van costs (fuel, insurance, RUC):      $8,000
Tools & equipment:                      $3,000
Insurance (public liability, etc.):     $2,000
Phone & internet:                       $1,500
Marketing:                              $2,000
Accounting & software:                  $1,500
GST registration costs:                 $500
Miscellaneous:                          $2,000
────────────────────────────────────────────
Total expenses:                         $20,500

Total needed: $70,000 + $20,500 = $90,500 per year

Step 3: Calculate Billable Hours

How many hours will you actually bill?

Weeks worked per year: 48 (4 weeks holiday)
Hours worked per week: 40
Total hours: 48 × 40 = 1,920 hours
Billable percentage: 65%
(35% is non-billable: quoting, travel, admin)
Billable hours: 1,920 × 0.65 = 1,248 hours/year

Step 4: Calculate Your Minimum Hourly Rate

$90,500 ÷ 1,248 hours = $72.52/hour

Round up: $75/hour minimum

Add profit margin (20%): $75 × 1.2 = $90/hour

This is your minimum hourly rate to:

• Pay yourself $70k
• Cover all expenses
• Have a 20% buffer for slow periods

What Should You Actually Charge? (NZ Industry Rates 2026)

Typical hourly rates by trade:

• Location (Auckland/Wellington higher than regions)
• Experience (5+ years can charge top rates)
• Specialization (gas fitting, heritage restoration, etc.)
• Certifications (Master Plumber, Registered Electrician)

How to Price Fixed-Price Jobs

The formula:

(Labour hours × hourly rate) + Materials + Margin = Quote

Example: Hot water cylinder replacement

Labour:
4 hours × $95/hour = $380

Materials:
Rheem 180L cylinder: $1,200
Valves & fittings: $180
Copper pipe (3m): $120
Total materials: $1,500

Subtotal: $380 + $1,500 = $1,880
Margin (20%): $376
Total quote (excl GST): $2,256
Add GST (15%): $339
────────────────────────────
Final quote: $2,595 (inc GST)

Round to: $2,600

Pricing Psychology: How to Present Your Prices

Tip 1: Anchor with Higher Price First

Bad:

Basic deck: $8,500
Premium deck: $12,800

Good:

Premium deck: $12,800 (Most Popular ⭐)
Basic deck: $8,500

Why: Premium option makes basic look like a bargain.

Tip 2: Use "Good, Better, Best" Pricing

Example (bathroom renovation):

💰 Budget Bathroom: $9,500
Standard fixtures
Basic tiles
3-year warranty

⭐ Premium Bathroom: $14,500 (Most Popular)
Designer fixtures
Premium tiles
5-year warranty

💎 Luxury Bathroom: $19,500
High-end fixtures
Imported tiles
Heated floors
10-year warranty

Result: Most customers choose middle option. You rarely sell bottom tier.

Tip 3: Show Value, Not Just Price

Bad:

Hot water cylinder replacement: $2,600

Good:

Hot water cylinder replacement: $2,600
Includes:
✅ Rheem 180L cylinder (10-year lifespan)
✅ All valves and fittings
✅ Full installation & testing
✅ Compliance certification
✅ 6-year warranty
✅ No hidden fees

Why: Customer sees what they're paying for.

Tip 4: Use Odd Numbers (Ending in 5 or 9)

Research shows:

• $2,600 feels expensive
• $2,595 feels like a better deal (even though it's $5 less)

When to Discount (And When Not To)

When Discounting Makes Sense

1. Slow period "Book this week and save 10% - I have a gap in my schedule"

2. Bulk work "Do both bathrooms at once - 15% off second bathroom"

3. Referral incentive "Refer a friend who books - you both get $100 off"

4. Fast payment "2% discount if paid within 7 days"

When NOT to Discount

1. Customer says "Your competitor quoted $X less"

Bad response: "Okay, I'll match it"

Good response:

"I understand price is important. My quote includes [premium materials, warranty, certification, etc.] which might not be in their quote.
Happy to break down the difference if you'd like?"

2. Customer just wants a cheaper price

Don't: Drop your price to win the job

Do: Explain your value or walk away

Reality: Cheap customers are often problem customers (late payments, complaints, unrealistic expectations).

How to Raise Your Prices (Without Losing Customers)

The fear: "If I charge more, I'll lose all my customers!"

The reality: Most tradies are undercharging. Raising prices often INCREASES demand (perceived value).

How to Do It

Method 1: Gradual Increase

• Increase 5-10% per year
• Announce 30 days in advance
• Grandfather existing quotes

Hi [Name],
Quick heads up - due to rising costs (materials, fuel, insurance), my rates will be increasing by 8% from March 1st.
Any quotes sent before Feb 28th will honor the current pricing.
Thanks for your understanding and continued support!
Cheers,
Mike

Method 2: Premium Positioning

• Add value (faster service, better warranty, premium materials)
• Increase price to match
• Attract higher-quality customers

Old: $90/hour, 5-day turnaround, 1-year warranty
New: $120/hour, 48-hour turnaround, 5-year warranty

Common Pricing Mistakes

❌ Mistake 1: Pricing Based on Competitors

Problem: "Other plumbers charge $85/hour, so I'll charge $80"

Why it's bad: You don't know their costs. Race to the bottom.

Fix: Price based on YOUR costs and value.

❌ Mistake 2: Not Including Travel Time

Problem: Charge for on-site hours only. Travel is free.

Why it's bad: 3 hours driving = 3 hours of lost income.

Fix: Add call-out fee or include travel in hourly rate.

Example:

Hourly rate: $95
Call-out fee: $75 (covers travel)
or
Hourly rate: $105 (includes travel time)

❌ Mistake 3: Forgetting About GST

Problem: Quote $2,000, customer pays $2,300 (with GST). They feel tricked.

Why it's bad: Surprise costs damage trust.

Fix: Always quote GST-inclusive for homeowners.

Homeowner quote: "$2,300 (inc GST)"

Business quote: "$2,000 + GST = $2,300"

❌ Mistake 4: Underestimating Job Duration

Problem: You quote 3 hours, job takes 6 hours.

Why it's bad: Fixed price job now loses you money.

Fix: Add 20-30% buffer to time estimates.

Example:

Estimated time: 3 hours
Buffer (25%): 0.75 hours
Quote based on: 3.75 hours (round to 4)

Should You Show Your Hourly Rate to Customers?

Two approaches:

Approach 1: Transparent Hourly Rate

Example quote:

Labour: 4 hours @ $95/hour = $380
Materials: $1,500
Total: $1,880 + GST

Pros: Transparency builds trust

Cons: Customers may question hours

Approach 2: Flat Rate (Hide Hourly Rate)

Example quote:

Hot water cylinder replacement (all-inclusive): $2,300

Pros: Focuses on value, not time

Cons: Less transparency

Recommendation: Use flat rates for standard jobs. Use hourly for custom/unpredictable jobs.

How to Handle "That's Too Expensive"

Customer: "Your quote is too expensive. Can you do it cheaper?"

Response Option 1 - Justify Value:

"I understand budget is important. My quote includes:
Premium Rheem cylinder (10-year lifespan vs 5 for cheaper brands)
6-year warranty (most offer 1-2 years)
Certified installation (compliance included)
No hidden fees

I could reduce the cost by using a cheaper cylinder, but I don't recommend it. Let me know if you'd like me to quote that option."

Response Option 2 - Offer Alternatives:

"I can offer a budget option:
Standard cylinder instead of premium: Saves $300
Remove extended warranty: Saves $150

New total: $2,000 (instead of $2,450)"

Response Option 3 - Walk Away:

"I understand. Unfortunately, that's the best price I can do while maintaining quality. If you'd like to proceed, let me know. Otherwise, no hard feelings!"

Important: Don't drop your price without removing value. Otherwise you train customers to always negotiate.

Summary: Pricing Action Plan

1. Calculate your minimum hourly rate:

• Add up expenses
• Decide target income
• Calculate billable hours
• Divide: (Income + Expenses) ÷ Billable Hours

• Are you below market? Raise prices.
• Are you above market? Justify with value.

• Hourly: For unpredictable jobs
• Fixed: For standard jobs

• Show value, not just price
• Use "Good, Better, Best" tiers
• Always include GST

• Better customers pay more
• Cheap customers are often problem customers

Ready to Send Professional Quotes?

Paymate helps you:

• Create professional quotes in 2 minutes
• Automatically calculate GST
• Convert quotes to invoices in 1 click
• Track which quotes are pending vs approved

Related Articles:

• How to Write Professional Quotes That Win Jobs
• How to Get Paid Faster: 10 Tips
• Quote vs Invoice: What's the Difference?