Why break-even pricing falls short
Mannie Ghimire
Author
Quoting your services with confidence means setting a target hourly rate that truly reflects all your business costs, including superannuation, overhead expenses, paid time off, and owner drawings. Many sole traders and SMB owners unknowingly quote break-even rates that strain cash flow and overlook Australian tax obligations like PAYG instalments and BAS. Our hourly rate calculator helps you build a pricing strategy tailored to your structure—whether you operate as a sole trader or Pty Ltd—so you can protect your cash flow and send quotes you can stand behind
FAQ's
Relying on break-even pricing can leave you vulnerable to unexpected costs and missed growth opportunities. Break-even rates often ignore components like owner drawings and future growth margins. This oversight can limit your business's ability to sustain operations during slow periods or invest in new opportunities.
Incorporating these elements ensures stability and growth potential, leading to the next crucial step.
What to include in a target hourly rate (super, overhead, time off, quiet periods)
To set a strong target rate, consider:
Superannuation contributions
Business overheads
Paid time off
Income for quiet periods
By factoring these into your pricing, you're not just covering costs—you're preparing for growth and stability. Each component protects your business, ensuring long-term viability.
Determining your rate is just the beginning; how you use it is key.
Need a second set of eyes? Book a consult
Ready to refine your pricing strategy? Reach out for a consultation to ensure your rates are as strategic as your business plans. https://www.ebta.com.au/contact-us
P.S. Taking control of your pricing now means greater financial security in the future.
