How to Price Your Services as a South African Tradesperson or Freelancer
Undercharging is one of the most common mistakes South African freelancers and tradespeople make. This guide walks through calculating a rate that covers your costs and pays you properly.
By Joshua Trow, founder of Invo. Published . 9 min read.
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The short answer. Work out the lowest rate that covers your living costs, your business costs and tax across the hours you can bill, which is usually 1,200 to 1,400 a year. That rate is your floor. In the worked example below it comes to about R440 an hour.
The undercharging problem
Undercharging is common among freelancers and tradespeople. This guide walks through calculating a rate grounded in real numbers, not guesswork or whatever "feels right" on the day.
Step 1: Calculate your minimum viable rate
Your minimum viable rate (MVR) is the hourly or daily rate below which you can't cover your costs and pay yourself a living wage. Four things go into it:
- Annual personal expenses: rent, food, transport, insurance, phone
- Annual business expenses: tools, vehicle, insurance, software, marketing
- Tax rate: the share of your income that goes to tax. Personal income tax rates run from 18% to 45%, and your effective rate depends on your profit, so check SARS's tax tables or ask your accountant. We'll use 30% in the example
- Billable hours: roughly 1,200 to 1,400 a year once you account for admin, marketing, leave, and sick days
MVR = (personal expenses ÷ (1 − tax rate) + business expenses) ÷ billable hours
Personal expenses are paid out of money you've already been taxed on, so they're grossed up for tax. Business expenses come off before tax, so they're added as they are.
If the tax provision line is unfamiliar territory, particularly the idea of paying tax twice a year yourself rather than having it deducted monthly through PAYE, our provisional tax guide walks through exactly how that schedule works.
You need R30,000 a month to live and spend R5,000 a month on business costs. You assume a 30% tax rate and bill 1,300 hours a year.
- Personal expenses for the year
- R360,000
- Grossed up for tax (÷ 0.7)
- R514,286
- Plus business expenses for the year
- + R60,000
- What you need to bill
- R574,286
- Divided by 1,300 hours
- about R440 an hour
Charge less than that and you lose ground every year.
Step 2: Find out what the market pays
Your MVR is the floor. The market sets the ceiling. Find out what others with your skills and experience actually charge:
- Ask peers in your industry, directly or in WhatsApp groups
- Browse job boards: advertised day rates show what clients expect to pay
- Talk to recruiters who work in your field
- Check freelancing platforms for comparable roles
Step 3: Price for value, not just time
The most profitable pricing isn't hourly, it's value-based. A website that drives R1m in client sales is worth far more than 40 hours of a developer's time, and a plumber who prevents R80,000 in water damage delivers value well beyond the hours spent fixing the pipe. Ask what the work is actually worth to the client, then price accordingly, with your MVR as the floor rather than the target.
Step 4: Itemise every overhead on your quote
Materials, travel, parking, subcontractors: all of it belongs on the quote. Plenty of tradespeople absorb these costs to look competitive, and it eats into their margin until the year-end numbers look worse than expected. Itemise everything and explain each line clearly instead. Once the client accepts, the same lines carry onto your invoice (see invoice vs quote and how to create an invoice).
The confidence problem
Most undercharging isn't a maths problem. It's a confidence problem: fear of a client saying no, imposter syndrome, comparing yourself to cheaper competitors who may not even be very good.
Clients who choose purely on price are usually the hardest to work with anyway. Higher prices often read as a sign of higher quality, and quoting your real rate filters out time-wasters before they ever take up your calendar.
Raise your rates once a year
The Reserve Bank targets inflation at 3%, with a tolerance band of one percentage point either side. Even modest inflation erodes a flat rate year after year. Skip the raise and you're taking a real pay cut every year, even if it doesn't feel like it in the moment. Build a rate review into your calendar: January or your business anniversary are natural moments to do it.
Once you're pricing properly, get paid on time too: see 8 ways to get paid faster, and Invo's plans if you want quotes, invoices and reminders in one place.