Recession-Proof Pricing for Geelong Trade Businesses

Diesel, timber, steel, insurance premiums, wages — everything a Geelong tradie buys has gone up over the last two years, but a lot of businesses are still quoting off the same rate card they used in 2023. That gap between what you charge and what the job actually costs is where profit quietly disappears.

Why Your Old Pricing Model Is Broken

Most trade businesses set an hourly rate or day rate years ago and adjust it occasionally "when it feels right." The problem is that costs don't move in a straight line — material prices spike unevenly, fuel fluctuates weekly, and insurance renewals jump once a year in a lump. If your pricing isn't reviewed against actual current costs at least twice a year, you're almost certainly under-charging on some jobs without realising it.

• Materials: Timber, copper, steel and fittings have had multiple price rises since 2022 — some suppliers now reprice monthly.
• Fuel and vehicle costs: Ute running costs, servicing and insurance have all risen well above general CPI in Victoria.
• Wages: Award rates under the FairWork Act 2009 are indexed annually, and subcontractor rates in the Geelong region have followed suit.

If your quoting formula hasn't changed in that time, your margin has been shrinking every single job.

Working Out Your True Cost Per Job

Before you touch your prices, you need an honest number for what a job actually costs you — not what you assume it costs. That means adding up:

• Direct labour: wages, super (currently 12% under the Superannuation Guarantee (Administration) Act 1992 from 1 July 2025), and any penalty rates.
• Materials at current supplier prices — not the price you paid six months ago.
• Vehicle and travel time to and from the job site.
• Overheads: insurance, tools, software, admin time, a share of your bookkeeping and accounting costs.

Add these up and you get your break-even rate — the absolute minimum you can charge without losing money. Everything you price below that number is a job that's costing you to complete.

Building In Margin, Not Just Covering Costs

Break-even isn't a pricing strategy — it's the floor. On top of your true cost per job, you need a margin that funds growth, covers slow weeks, bad debts, and lets you actually pay yourself properly. Most trade businesses should be targeting somewhere between 20-40% gross margin depending on the trade and job type, though this varies significantly by specialty.

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Handling Existing Quotes and Contracts

Once a customer accepts a quote in Australia, that quote generally becomes a binding offer under Australian Consumer Law — you can't just decide halfway through the job that materials cost more and add it to the invoice. This is where a lot of Geelong tradies get caught out on longer renovation or fit-out jobs where costs move between quoting and completion.

• Always include a written cost-escalation clause in quotes for jobs running longer than a few weeks — stating you may adjust price if material costs rise beyond a set percentage.
• Get variations signed before proceeding with extra work, not after.
• Remember GST applies to the full value of any variation under the GST Act 1999 — invoice it correctly so your BAS figures stay clean.

Raising Prices Without Losing Clients

Most tradies delay price rises because they're worried about losing work — but a quiet, well-communicated increase almost always costs you less than absorbing rising costs silently. A few things that work in the Geelong market:

• Give regular clients advance notice, even just a short email or text, rather than a surprise on the invoice.
• Bundle the increase with something visible — a warranty extension, faster response time, or a materials guarantee.
• Don't apologise for the increase. Rising costs are industry-wide; customers understand this far better than tradies assume.
• Review prices on a schedule (e.g. every January and July) rather than reactively — it becomes a normal part of doing business, not a crisis response.

Using Xero to Track Job Profitability

You can't price properly if you don't know your numbers job by job. In Xero, setting up tracking categories or Projects for each job lets you allocate labour, materials and time against a specific job code, then pull a profitability report showing exactly which job types, which clients and which crew members are actually making you money.

This is the difference between a P&L that "looks fine" at year-end and knowing in real time that your bathroom reno jobs are 15% more profitable than your kitchen jobs, or that one particular supplier's price rises have quietly wiped out your margin on plumbing fixtures.

What To Do Next

Rising costs aren't going away, and hoping your margin will "sort itself out" isn't a strategy. Start by pulling your last three months of job costs against what you actually invoiced — you'll usually find at least one job type that's running at a loss. Fix your break-even numbers first, build a realistic margin on top, put a cost-escalation clause in every quote over a few weeks' duration, and review pricing on a set schedule rather than waiting until cash flow forces your hand. If you want help setting this up properly in Xero, that's exactly what we do for trade businesses across Geelong and Victoria.