Inflation is Killing Your Trade Business
In 2004, you could get a banana for around $1.50 per kilo, fuel for $1.00 per litre, and a movie ticket for $12.
Fast forward to 2024, and bananas are closer to $4 a kilo, fuel is often over $2 a litre, and a trip to the movies will set you back nearly $25.
Even a simple cup of coffee that cost around $2.50 back then now costs $5 or more in most places.
That’s inflation in action – it slowly but surely pushes the cost of everything up over time.
But here’s the kicker: many tradespeople are still charging the same rates they did back in 2004.
In 2004, my boss charged $90 an hour for his work.
Today, 20 years later, I’m seeing new trades members join our academy still charging around $90 to $100 an hour.
While everything from coffee to fuel has skyrocketed, many builders, plumbers, and electricians are stuck charging rates that don’t reflect the true cost of doing business in 2024.
The problem?
Inflation has eaten away at your profits, and if you haven’t adjusted your pricing, you’re losing money.
The Real Cost of Not Raising Prices for Trades
If your hourly rate hasn’t changed in the last decade, you’re in big trouble.
Inflation hasn’t stopped, and neither have your operating costs.
Think about it.
What’s changed since 2004?
Everything.
Fuel for your work vehicle has doubled.
Materials for construction jobs are more expensive.
Insurance premiums are higher.
Wages for your crew have increased.
If you’re not raising your rates to keep up with these rising expenses, every increase is coming out of your pocket.
Here’s the reality: after calculating the true cost of running a trades business today, I found that most businesses need to charge between $95 to $125 per hour per staff member just to break even.
That’s just enough to cover basic expenses like materials, fuel, labour, and overheads.
If you’re still charging $90 an hour like it’s 2004, you’re losing out on profit.
This means you’re either working overtime to make ends meet, or relying on extreme efficiency to squeeze out a tiny profit.
Neither of these are long-term solutions – they just lead to burnout and stress.
The Impact of Inflation on Your Construction Business
Inflation is sneaky.
It creeps up every year, slowly increasing the cost of everything around you.
Remember when bananas were $1.50 a kilo and now they’re $4?
That’s inflation.
The same thing is happening to your business costs.
Whether you’re a builder, electrician, or plumber, the cost of fuel for your van, the materials for your jobs, and even your team’s wages have all gone up since 2004.
If you haven’t adjusted your prices over time, you’re effectively charging less and less for your work as the years go by.
And the longer you wait to raise your rates, the harder it gets to keep up.
What Happens When Tradespeople Don’t Adjust for Inflation?
Here’s what happens if you don’t raise your rates in the face of rising costs:
1. You’re Paying Out of Pocket
As your operating costs rise, but your prices stay the same, your profit margins shrink.
Every time the price of fuel goes up, or materials increase in cost, that money comes directly out of your profit.
You might be working just as hard as you were in 2004, but now you’re taking home less money for the same work.
2. You’re Forced to Work Overtime
When your rates don’t cover your rising expenses, you’re forced to take on more jobs just to make ends meet.
This often means working longer hours, working on weekends, or pushing your team to finish jobs faster.
While this might get you by in the short term, it leads to exhaustion and mistakes.
3. Your Team Feels the Pressure
When profit margins are tight, it’s tough to give your team the pay and support they deserve.
You’re asking them to work harder, but they’re not seeing the benefits.
This leads to low morale, stress, and higher turnover.
Skilled tradies, like carpenters and tilers, will leave for better-paying opportunities, leaving you short-staffed and struggling to keep up.
4. You Attract the Wrong Clients
When you’re the cheapest option around, you tend to attract clients who are only interested in saving money.
These clients often turn out to be the most demanding and the least loyal.
They’ll haggle over every detail, expect more than they’re paying for, and ditch you the second they find someone cheaper.
Why Not Raising Prices is a Losing Game for Tradies
There’s a common mindset in the construction industry that any work is better than no work.
But here’s the thing: if you’re taking on jobs at outdated rates, you’re actually doing more harm than good.
If your prices don’t cover your costs, you’re effectively working for free – or worse, losing money.
Many tradespeople, from builders to plumbers, think they can make up the difference by taking on more jobs.
But working more hours for less money is a one-way ticket to burnout and frustration.
You’re not just hurting your business – you’re risking your health and well-being too.
What You Should Be Charging in 2024
We’ve done the maths.
Based on the actual costs of running a construction business today – from fuel, to materials, to labour – the average tradie needs to charge between $95 and $125 an hour just to break even.
If you’re still charging in the $90-$100 an hour range, you’re either running at a loss, working overtime to cover the difference, or you’re relying on being extremely efficient just to make a little profit.
None of these are sustainable in the long term.
It’s Time to Adjust Your Rates Before It’s Too Late
If you’re still stuck in 2004 pricing, it’s time to wake up.
If you don’t adjust your prices for inflation and increased costs, you’re devaluing your work and leaving money on the table.
Your skills and your time are worth more, and your pricing should reflect that.
Join Our Profitable Pricing Masterclass
Ready to stop undercharging and start making real profit?
Join our Profitable Pricing Masterclass and learn how to price your services in line with inflation, rising costs, and the value you bring to your clients.
We’ll show you how to create a pricing strategy that ensures your business stays profitable, without overwhelming your team or scaring off good clients.
It’s time to take control of your pricing and start getting paid what you’re worth.