How we work
Most contractors price jobs by guessing a markup percentage on top of materials and labour. That works until fuel rises, an old ute breaks down, or insurance renews 20% higher. Activity-based costing is how we fix that for good.
The traditional approach: take your direct cost (materials + labour + plant), add a flat 20% “margin”, and call it a day. The problem is that 20% is supposed to cover everything else— fuel, vehicles, your salary, software, insurance, accountants, bookkeeping, training, downtime, sick days. It’s nowhere near enough.
Two contractors with identical materials and labour can have wildly different real costs. One leases a $90k ute and runs Xero, MYOB, ServiceM8 plus a bookkeeper. The other drives an old paid-off truck and runs spreadsheets. Same flat margin → very different actual profitability. The flat-margin shortcut hides this.
Activity-based costing turns the question around. We start from your realoverhead (last 12 months of P&L plus depreciation), divide it across the activities you actually bill (digger hours, fence metres, concrete cubics, labour days), and tell you exactly what each activity needs to recover before any margin gets added on top.
We read the last 12 months of trading data from your Xero or MYOB (your accountant prepared it; we don't re-audit it), plus the depreciation and lease lines from your balance sheet. Every operating cost gets categorised — fixed overhead (admin, software, insurance), recoverable variable cost (fuel, vehicle running, finance interest), or direct job cost (materials, subbies, labour). Most contractors are surprised by what ends up in each bucket.
We translate the overhead into per-activity rates. If your van costs $14,000 a year to run and you do 200 jobs, that's $70 per job. If your owner-salary target is $130,000, we work out how many billable hours that requires and what hourly recovery rate makes it work. Each activity ends up with a recoverable cost number underneath it.
Every line on a quote — labour, materials, equipment, subcontractors, other — carries the right uplift. Materials might need 18% just to cover ordering, freight, and storage. Labour might need 35% to cover sick days, training, supervision. Subbies might need 12% to cover the admin and risk premium. We set the numbers; your software (Costie or otherwise) applies them automatically going forward.
Cost recovery isn't set-and-forget. Fuel rises, insurance renews, EBA wage increases land — and the uplifts that worked last quarter under-recover this quarter. With a pricing partnership, we re-run the numbers every 90 days and adjust your quote templates so the next batch of jobs still covers what they actually cost.
You stop guessing. Every quote you send out has a defensible cost base under it — if a client pushes back on price, you can show them the breakdown. If a job goes sideways, you know exactly which line item missed and by how much.
You stop working harder to stand still. Most contractors who go through this find they’ve been under-recovering by 8–15% — that’s the difference between flat-out-and-broke and flat-out-and-banking-something.
And when supplier prices change, fuel jumps, or you put a new ute on the books, you don’t panic — you re-run the numbers, update your uplifts, and the next quotes are already calibrated.
A 30-minute call. We’ll ask three or four questions and tell you whether an activity-based audit will pay for itself.
