To work out what to charge, start with what your business costs to run, add a profit margin, then check the market. Here is how, in rands.
Short answer
Add up what the business costs to run each month, including a fair wage for you. Divide it by the hours or units you can actually sell, which gives your break-even price. Then divide by 0.85 for a 15% margin, or by 0.8 for 20%. That is your floor: the lowest price you can charge and still make a profit. Check competitors after you know your floor, not before.
Checked against SARS on 22 September 2026.
What should I charge for my work?
You should charge at least enough to cover every cost of the business, pay yourself properly, and leave a profit on top. Many owners start from the other end: they look at what others charge and go a little lower. That tells you what the market accepts, but not whether the price keeps your business alive.
Work out your floor first. Then decide where above the floor to sit.
What does your price need to cover?
Three things: your running costs, your pay, and your profit.
Running costs are everything the business pays each month whether you work or not: rent, vehicle, insurance, phone and data, bank fees, accounting, software. Look at your bank statements, not your memory. Real costs are often higher than the ones you remember.
Your pay is the wage the business should pay you and anyone who works in it. Leave it out and the business looks profitable when it is only paying you less than you are worth.
Profit is what is left after both. It pays for new equipment, slow months and growth. A business that only breaks even has no room for a late payer or a broken bakkie.
Materials you buy for a specific job are different. Charge them to the customer on top of your rate, on the quote.
How do you work out your floor price?
Divide your monthly costs, including wages, by the hours you can actually bill in a month. That is your break-even rate. Then divide it by 1 minus your target margin.
Billable hours are fewer than working hours. Travel, quoting, buying materials and admin all take time nobody pays for. Count only the hours a customer pays for.
Worked example
Thabiso runs a two-man electrical business in Bloemfontein. He charges R250 an hour. His costs:
| Each month | Rand |
|---|---|
| Running costs | 14 300 |
| Wages | 22 000 |
| Total to cover | 36 300 |
After travel, quoting and admin, the business bills 114 hours a month.
| Step | Rand an hour |
|---|---|
| Break-even: R36,300 divided by 114 hours | 318.42 |
| Floor at a 15% margin: R318.42 divided by 0.85 | 374.61 |
| Rounded up | 375.00 |
At R250 an hour, 114 hours brings in R28,500, which is R7,800 short of his costs every month. He is not just making too little profit. He is losing money on every hour he works. At R375, the same hours bring in R42,750, which covers costs and leaves R6,450.
Against the unrounded floor, the gap is R124.61 an hour, or R14,206 a month across 114 hours. That is more than R170,000 a year the business is not earning, and a fuller order book will not fix it. Only the price will.
Watch out
Adding 15% to your costs does not give you a 15% margin. R318.42 plus 15% is R366.18, and at that price your margin is only 13%. Margin is a share of the price, so you divide by 0.85, not multiply by 1.15.
How do you price products instead of hours?
The same logic applies per item. Work out what each item costs you to make or buy, then add its share of your monthly running costs and wages, based on how many you realistically sell in a month. Divide that total cost per item by 1 minus your margin.
If you sell few items, each one carries a larger share of your overheads, and your floor is higher. Selling more lowers the share per item, which is why volume matters for product businesses.
Should you charge less than your competitors?
Not if it takes you below your floor. A lower price wins work only if you can afford to do it. If competitors charge less than your floor, find out why before you follow them: they may have lower costs, be paying themselves too little, or be going out of business slowly.
Customers compare more than price. Turning up on time, a clear written quote, a guarantee and quick answers on WhatsApp all justify a higher rate. A quote that shows three options, from basic to full service, lets customers choose to spend more.
In South Africa
If you are registered for VAT, quote your price plus VAT at 15%, so R375 becomes R431.25 to the customer, and the VAT goes to the South African Revenue Service (SARS), not to you. Registration is compulsory once taxable sales exceed, or are likely to exceed, R2.3 million in 12 months. Confirm on the SARS VAT page.
How do you raise your prices without losing customers?
Raise them for new customers first, and give existing customers notice in writing, such as 30 days. Explain it plainly: costs have gone up and you want to keep the same standard of work. Customers who value your work often stay. Those who leave only over price are often the least profitable to serve.
Check your floor again whenever your costs change, and at least once a year. A price that was right two years ago may be under your floor today.
What to do next
- Work out your own floor with the pricing calculator (free for members). It can load this worked example, so you can check it against this article.
- Take the Get paid properly course (free for members). Lesson 1, What your price must actually cover, works through this example step by step.
- Fill in the free Pricing Strategy Worksheet, then read How to create a startup budget if you are not yet trading.
Sources
- SARS, Value-Added Tax, checked 22 September 2026
- SARS, Register for VAT, checked 22 September 2026
Frequently asked questions
What profit margin should a small business aim for?
There is no single right number. It depends on your trade, your risk and how much you need to reinvest. Our worked example uses 15%. Whatever you choose, make sure your price is above your break-even, with your own wage already included.
Should I charge a call-out fee?
If travel and quoting take time you cannot bill, a call-out fee or a minimum charge recovers it. Say so clearly on your quote and before you travel.
How do I charge for a fixed-price job?
Estimate the hours honestly, multiply by your rate at or above your floor, and add materials. Then add a margin for the unexpected, and write down what is not included.
This article is general information, checked against the official sources shown on the date given. It is not legal, tax or financial advice. Rules change, so confirm with the official source or a qualified adviser before you act.
Updated on 22 September 2026: rewritten as “What should I charge?”, shortened, and linked to the pricing calculator and the Get paid properly course. Added a worked example in rands and the current VAT rate and threshold.