Your hourly price assumes every paid hour can be billed

The hourly calculation uses an unrealistic denominator

A hypothetical trade business divides weekly costs by every hour its team is paid. The resulting customer rate looks competitive, but travel, setup and administration mean fewer hours are actually billed. Review the capacity assumption before concluding that staff simply need to work harder. Paid time, productive site time and chargeable customer time can be different measures.

Measure a representative working period

Use actual records to identify work, travel, preparation and other relevant activities. Avoid choosing only the busiest week or treating every unbilled hour as waste. Some tasks are necessary to deliver the service. Keep payroll obligations separate from the question of what the customer agreed to pay; an internal pricing calculation does not determine employee entitlements.

Include the relevant cost base

Business.gov.au's pricing guidance recommends considering labour and overheads when calculating prices, including relevant employment costs for hourly services. Ask the accountant to review the cost inputs and avoid counting an expense twice. The purpose is a consistent estimate of what the business must recover, not a claim that every cost can automatically be added to an existing customer's invoice.

Source: business.gov.au: Choose a pricing strategy

Test the rate with realistic hours

In the hypothetical example, spreading the same weekly costs across fewer saleable hours produces a different required recovery per hour. Show the assumptions rather than disguising the difference in a single margin percentage. Include realistic work availability and any contractual minimums. Do not assume the diary will stay fully booked without evidence.

Choose a supported adjustment

Consider whether scheduling, scope clarity or future pricing addresses the actual gap. Check existing terms before changing charges. Avoid cutting necessary safety, maintenance or administration merely because it is not separately billable. A better utilisation measure should improve decisions, not encourage unsafe shortcuts or inaccurate time recording.

Review actual recovery after the change

Compare billed work, receipts and relevant costs over a suitable period. CRP can help organise the business figures for review. The key is to price from hours the business can realistically sell while recognising the necessary work that happens around them.