Article · pricing · May 2026
How to price your services in NZ (2026) — without undercharging
TL;DR
Most new NZ service operators undercharge — they price off what feels cheap enough to win the job instead of what the work actually costs to deliver profitably. This guide covers the three pricing methods, the real costs you must build into every rate (tax, ACC, vehicle, downtime), how to quote with confidence, and how to raise prices on existing customers without losing them.
The core mistake
Undercharging is the #1 reason service businesses stall
New operators price to feel competitive — usually by undercutting the nearest quote. The problem: they're pricing against their costs as an employee, not their costs as a business. When tax, ACC, vehicle, insurance and unpaid admin hours hit, the 'busy' operator is barely breaking even and can't afford to hire, take leave, or absorb a bad month. Price for the business, not for the fear of the quote.
The three ways to price (use all three)
- Cost-plus — add up what the job costs you to deliver (your time at a real rate, plus materials, fuel, wear) and add a margin. This is your floor; never quote below it.
- Market rate — what local operators charge for the same work. This tells you the ceiling and whether your floor is even viable in your patch. Ring three competitors and get quotes.
- Value-based — what the result is worth to the customer. A spotless end-of-tenancy clean that gets a bond back in full is worth more than 'three hours of cleaning'. Price the outcome, not the hours, where you can.
Good pricing sits above your cost-plus floor, near or above market rate, and is justified by the value you deliver. If your floor is above market rate, your costs are too high or the patch is too competitive — that's a business-model signal worth heeding early.
What every quote has to cover
The hourly figure in your head as an ex-employee is not your business rate. Your rate has to absorb all of this and still leave a profit:
- Income tax — 20–30% off the top (see the self-employed setup checklist).
- ACC levies — the self-employed ACC invoice is coming whether you priced for it or not.
- GST — only if you're registered; if you are, your prices need the 15% on top (GST for sole traders).
- Vehicle and fuel — running a ute isn't free; cents per kilometre add up fast.
- Gear and consumables — equipment wears out and needs replacing.
- Insurance — public liability at minimum.
- Non-billable hours — quoting, invoicing, travel between jobs, marketing. You might only bill 25–30 hours of a 40-hour week, so those billable hours have to carry the unpaid ones.
The number that shocks people
You bill far fewer hours than you work
A full-time solo operator typically bills 25–30 hours a week, not 40 — the rest goes to travel, quoting, admin and marketing. If you set your rate by dividing the income you want by 40 hours, you'll fall ~30% short. Divide by your real billable hours instead.
Charge-out rate calculator
The rate you actually need to charge
Set the take-home you want, the hours you can realistically bill in a week (not the hours you work), and your costs + tax. The result is the per-hour rate your quotes need to clear.
Required rate
NZ$87/hr
Gross revenue needed
NZ$116,667
The naive '÷ 40 hrs' rate
NZ$36/hr
What undercharging looks like
Modelled estimate. The gap between the two rates is exactly why pricing off a 40-hour week leaves new operators short — you bill the billable hours, but they have to carry the unpaid ones too.
Per-hour, per-job, or per-contract?
| Model | Best for | Watch out for |
|---|---|---|
| Per-job (fixed quote) | Most service work — the customer knows the price upfront | Quote accurately; getting faster then pays you more per hour |
| Per-contract (recurring) | The goal — standing fortnightly cleans or mows | A slightly lower per-visit rate is worth the guaranteed revenue |
| Per-hour | Genuinely unpredictable jobs (some handyman work) | Getting faster pays you less; always set a minimum call-out |
How to raise prices without losing customers
Your first customers were probably underpriced — you took them to get going. Raising prices feels terrifying and almost always goes fine. The method: give notice (a month is plenty), apply it to everyone at once so it feels like policy not a personal squeeze, frame it plainly ('from 1 July, fortnightly mows go from $45 to $50'), and don't apologise. Expect to lose the occasional most-price-sensitive customer — that's the point, they're the lowest-value ones. The maths almost always favours the rise: a 10% price increase that loses you 5% of customers leaves you earning more for less work.
Where pricing fits
Pricing sits on top of knowing how much you can realistically earn and getting your first 10 customers in the door. Get the customers, price the work properly from the start, and raise rates as your reviews and demand grow — that sequence is how a service business becomes genuinely profitable rather than just busy.
Common questions
How do I price my services as a new business in NZ?
Start with three reference points: your cost-plus floor (what the job costs you to deliver, including tax, ACC, vehicle and non-billable time, plus margin), the local market rate (ring three competitors), and the value of the outcome to the customer. Price above your floor, around or above market, and justify it with the result you deliver. Never price off what feels cheap enough to win — that's how operators end up busy and broke.
Why do service businesses fail from undercharging?
Because new operators price against their old employee hourly rate, not their true business costs. Once income tax, ACC, vehicle costs, insurance and unpaid admin hours come out, an underpriced operator is barely breaking even — with no margin to hire, take leave, or survive a slow month. Undercharging doesn't just lower profit; it removes the buffer that lets a business grow.
Should I charge per hour or per job?
Per job (a fixed quote) is usually better than per hour, because if you get faster and more skilled you earn more per hour rather than less — hourly pricing penalises efficiency. Per-contract recurring pricing is the ultimate goal for predictable revenue. Keep hourly only for genuinely unpredictable work, and always set a minimum call-out fee.
How many hours can I actually bill in a week?
A full-time solo operator typically bills 25–30 hours out of a 40-hour week — the rest goes to travel between jobs, quoting, invoicing, admin and marketing. This is why pricing your rate by dividing your target income by 40 hours leaves you short. Use your real billable hours, which means each billed hour has to carry the unpaid ones.
How do I raise my prices without losing customers?
Give a month's notice, raise everyone at once so it reads as policy rather than a personal decision, state the new price plainly without apologising, and accept that you may lose a few of the most price-sensitive (lowest-value) customers. The maths usually favours the increase: a 10% rise that costs you 5% of customers still leaves you earning more for less work.
If you're ready
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By Self Made team. Last updated 18 May 2026.