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Owner Builder Blog

Owner Builders Ask - Why are traddies so expensive?

28/11/2018

4 Comments

 
Wow, I cannot believe I have been asked that question again!
Why does a XXXXXXX (insert any qualified trade contractor) charge so much?
It just amazes me that it is so poorly understood why a good tradesman, that runs a profitable business, that is compliant and reliable charges 100 plus dollars an hour.
The fact is any owner builder needs to understand, if you engage a trade contractor, you should be prepared to pay the appropriate hourly rate.
When you engage a contractor, you have a reasonable expectation that the traddie will be prompt, courteous, professional, competent, carry the appropriate insurances and be respectful of your needs and the requirements of the other trades he works with on your project.
So lets take a typical small contractor that employs two or three tradesman.
There business needs to comply with the relevant legislation and remain compliant against the provision of their individual or corporate licenses.
Consider the following fees and overheads that must be met before they can even ‘open the doors’ these days:
  • Wages
  • Workers Compensation (workcover)
  • GST
  • PAYG Taxation
  • Contractors Risk
  • Public Liability
  • Professional Indemnity
  • Motor Vehicle
    • Comprehensive insurance
    • Registration
    • Repairs and maintenance
    • Tolls
    • Fuel
    • Lease or Hire Purchase financing cost
  • Premises and facilities
    • Rent or mortgage
    • Phone
    • Electricity
    • Insurance (building and contents)
    • Rate
    • Water
    • Body Corporate
  • Marketing
    • Website
    • Advertising
    • Letterheads and Stationery
  • Fees, Registrations and Licensing
    • Professional Development costs
    • Subscriptions and Memberships
    • Annual contractors license fees
    • Business Registration
    • ASIC
    • Accounting Fees
    • Inventory costs
The list goes on and on.
Each week, month and year, these costs are there for trade contractors. These obligations need to be paid in full or the business cannot operate.
After you consider the business expenses, think about what it is that you are paying for.
Do you want safe and compliant services and finishes for your property or will you be satisfied with shoddy workmanship that does not really provide value and may make it difficult to realise a fair price for your property should you choose to sell?
None of this even considers the time and effort that the contractor has expended to gain their qualifications.
Most trades require considerable study and effort to demonstrate competency and be granted their license.
So, if owner builders feel they cannot afford a fully qualified, registered, competent and insured contractor, I would argue they cannot afford not to!
Happy owner building!
Rick
4 Comments
Stephen Manna
8/4/2019 14:27:52

Hi my name is Steve and I'm an Electrician in NSW. All comments your made were spot on in relation to the running costs of having a small business, and furthermore, the educational trade training which was carried out over a number of years. I also have a cablers licence which again I had to complete a course and have to pay an ongoing fee every there years to keep the licence. My argument would be that whilst roughing in on some places the owner requires a full cinema type system throughout the house and so on. they require a smart hub etc. Yes, generally I can provide this service but what about those guys that have no formal education that complete the same task. They are charging up to $120 an hour for their services which I find outrages as this industry is some what unregulated. Any thoughts on this?

Reply
Geffrey Holgate
5/8/2019 20:55:15

Yes all comment were spot on, but sometimes traders up their prices even more, because they aren't interested in doing the job - instead of just being honest and saying no thanks.

Reply
Peter Ayres
3/6/2021 14:31:25

Such a common complaint about how much a traddie costs. However when you see all those expenses they incur just to run a business, it puts it all into perspective.

Reply
Randal Porter
4/10/2021 10:23:41

I am owner building a garage & shed extension because the early quotes received seem just so expensive for what I was wanting (have owner built before so I can cost out the project reasonably well).
I get the feeling there is a new level of price gouging going on now with property prices going through the roof & some tradies putting up prices to unreasonable levels.

Reply



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    Author

    Rick Heaton is a Building and Construction Industry professional with formal tertiary qualifications in management and training.

    With over 30 years assisting Owner Builders, he brings an easy style to providing information and advice to our students.

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