By Rob Burger, small business finance and strategy consultant, 2XR Business Solutions
Most electricians or contractors I meet are excellent at their trade, but few truly know what their time is worth.
 Supplied by Rob Burger |
About the author:
Rob Burger CA(SA) is a finance and strategy consultant who helps small businesses, contractors and professionals simplify their finances and grow sustainably. He has 30 years of experience in business and now focuses on helping SMEs build stronger, more profitable enterprises. |
You can be the best contractor in town, but if your pricing doesn’t cover your real costs, your business will always feel like a race to the next payment. The good news? Understanding the basics of time, cost and margin can transform how you run your business without any fancy accounting jargon.
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Bill for your time – all of it
Most small business owners only bill for the hours spent ’on the tools’. But you also spend time quoting, collecting materials, travelling, invoicing and sorting out administrative tasks. That time costs you, and it needs to be recovered.
“If you don’t bill for all your time, you’re giving away free labour.”
Here’s how to work it out: If you want to earn R40 000 per month and you pay R10 000 to your assistant or casual labour, you need to make a profit of at least R50 000 a month to break even. After all your admin time, travelling, holidays and leave, your hourly rate should be about R400 to R500/hour before materials and profit. Anything less, and you’re quietly losing money.
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Know what your equipment really costs
Your van, drills, ladders, equipment and even your phone aren’t free. Every job you do uses up a bit of that value, and unless you build it into your pricing, you’ll be paying for it out of your own pocket.
Here’s an example:
A van worth R240 000 used over four years costs R5 000/month in depreciation. Add insurance, maintenance and fuel, and it’s more like R8 000–R10 000 monthly. What about consumables? Do you bill for the extra piece of copper pipe you cut?
If you spread these ’hidden’ costs even across all your jobs at R80–R100 per job, you’re finally recovering the real running cost of your business
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Add a margin – you deserve to make a profit
Profit isn’t a bonus. It’s what keeps you in business when things go wrong.
After you’ve covered your time, materials and equipment, add at least a 15–25% margin. That’s not greed – it’s survival. If you have to buy an accessory for a client, add 20% to the list price. This will cover some of your costs. Margins pay for the unexpected – jobs that run late, parts that fail, or clients who don’t pay on time. And remember, price with confidence. Reliable, professional service is worth paying for. “Competing only on price is a race to the bottom, and nobody wins that race.”
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Evaluate your business like a pro
Set aside at least one to two hours a month to review your numbers.
Ask yourself:
- “What did I quote this month, and what did I actually earn?”
- “Did I cover every cost – fuel, materials, admin, time?”
- “What’s left after I’ve paid for everything (including myself)?”
- “Which jobs are making money, and which are not?”
You don’t need fancy, technical software. A basic spreadsheet or notebook works. The key is consistency – because what you measure, you can manage. Start tracking three numbers every month: revenue, expenses and profit. Once you see trends, better decisions will follow naturally.
Running a successful trade business isn’t about working harder. It’s about working smarter. When you understand what things cost, bill correctly for your time and add a fair margin, you move from getting by to building a business that lasts.
Money made easy isn’t about spreadsheets or accounting degrees. It’s about valuing your time, understanding your costs, and making sure every job pays its way.
Because at the end of the day, the smartest tool in your toolbox is financial understanding.
