What expenses go into your cost of operations figure?
Start with your profit and loss from the last 12 months and use those figures to estimate what each expense category will cost you going forward on a monthly basis. Include every overhead: insurance, vehicle costs, subscriptions, and anything else that keeps the business running.
Finance repayments on vehicles will not appear on your profit and loss, so add those monthly repayments in full. For vehicles you own outright, the spreadsheet applies a holding-cost allowance that covers depreciation and similar end-of-year adjustments your accountant may make.
Build in a 10% buffer on top of your estimated totals because costs increase over time. Also include work cover now rather than waiting for the end-of-year bill, because the liability exists from the moment you employ someone.
How do you account for labour in the cost of operations calculator?
For every person on your team, including yourself, enter their full pay rate, superannuation, and any allowances that appear on their payslip. Superannuation is currently 11.5% for the 2025 financial year and moves to 12% from the 2026 financial year onwards, so check which rate applies when you are filling this in.
If you are a sole trader without a formal wage, enter the amount you want the business to provide for you. That figure becomes the minimum the business must generate to be genuinely profitable for you.
For apprentices, you can set their contribution at 50% rather than 100% if they cannot perform at the same capacity as a fully qualified tradesperson. If they are near completion and can work independently, you can set their utilisation at one.
Subcontractors are treated differently. They are an external income stream, not a labour cost, so they are excluded from your hourly rate calculation. Their contribution is captured separately as a profit-per-hour figure.
How do billable days affect the number you need to hit each week?
The calculator lets you set how many days per year you are actively working and billing. For many trade businesses this is around 220 days, or roughly 18 days per month, once you account for public holidays, annual leave, and non-working days.
If your work is affected by wet weather, union site shutdowns, or other disruptions, add a buffer for those lost days. The buffer applies per billable person, so five buffer days means five days per person across the year.
Your weekly cost of operations figure is your break-even point. Anything you produce above that amount, after paying the wages you have set for yourself, is profit.
What does 80% efficiency actually do to your required charge-out rate?
If your team is working at full capacity and you can charge for every hour, the raw cost per resource for a fully qualified person works out at around $78 per hour. That is what you need to recover per billable hour at 100% efficiency.
When unchargeable time, travel, gaps between jobs, and delays reduce your billable output to 80% of your working hours, that $78 becomes close to $100. You have to charge $100 for 80% of your time to recover the same dollar value as charging $78 for 100% of your time.
This gap is where many trade businesses fall short. The pricing never moves to account for the hours that cannot be charged, so the business consistently under-recovers its labour cost.
How do materials and additional charges contribute to covering your costs?
Materials are a separate profit stream from labour. If you purchase materials from suppliers and apply a markup, that margin contributes directly to covering overheads and generating profit above your break-even point.
The calculator also has space for one-off charges such as service fees or travel fees. If your labour billings alone are not meeting your weekly cost of operations target, these additional charges can help bridge the gap. Enter the number of those charges you expect per week and the calculator shows what contribution they make.
How do you use the weekly cost of operations figure day to day?
Once your charge-out rate is set, the calculator shows what each team member needs to turn over in labour each week at both 100% and 80% efficiency. That gives you a clear daily and weekly target to manage against.
When a staff member is on leave, remove their contribution from the target for that week because their cost has already been factored into the annual model. The remaining team then has a revised number to aim for.
The profitability tab takes all of these inputs and projects what a full year of consistent performance at that level would look like, giving you a marker to guide business decisions as costs, staffing, and your own billable hours continue to change.
