PRICING FOR PROFIT, NOT JUST FOR WORK
FINANCE •
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“ Non-residential building plans passed show an even weaker trend, down about 85 % from the peak a decade ago,” he said.“ Arguably, there was an oversupply in the middle of the last decade, and the Covid-19 pandemic then dealt the sector a further blow.”
Despite these challenges, Jammine noted that renewed investment in infrastructure and mining development would provide an important boost for the construction materials sector, creating opportunities for companies such as AfriSam that play a key role in supplying cement, aggregates and readymix concrete to major infrastructure and development projects.
Reference:
Source: supplied by AfriSam
PRICING FOR PROFIT, NOT JUST FOR WORK
By Rob Burger, Small Business Finance and Strategy consultant, 2XR Business Solutions
Most electricians and contractors work hard. Long days, physical work, problem-solving under pressure. Yet many still struggle to make decent money at the end of the month.
The reason is rarely a lack of work. It is pricing.
Too many jobs are priced to stay busy, not to earn a real profit. That keeps cash moving, but it does not build a business. It simply creates exhaustion with very little to show for it.
Let’ s change how pricing is viewed.
Watch Dr Azar in conversation with Sharon Mdaka at the AfriSam Annual Budget conference here: https:// www. linkedin. com / feed / update / urn: li: activity: 7434551304078839808
The most common mistake Many tradespeople price jobs by asking,“ What will the customer accept?” or“ What does the guy down the road charge?”
That mindset turns a business owner into a price-taker. It focuses on winning the job, not on whether the job is worth doing. Every price must cover three things. First, the real cost of the job. Second, your time, skill and experience and thirdly, a profit that allows the business to grow and survive. If one of those is missing, you are paying for the job with your own effort.
Markup versus margin Markup and margin are often confused, and this misunderstanding quietly destroys profitability. Markup is what you add to your costs. Margin is what remains after the job is completed and paid for.
If a job costs R1 000 and you add a 20 % markup, the selling price becomes R1 200. The profit is R200.
Healthy trade businesses typically aim for gross margins between 35 and 50 %, depending on the trade, risk, and level of competition. That buffer allows reinvestment, stability and resilience.
That is not a 20 % margin. It is only a 16.7 % margin. This matters because overheads are paid from margin, not markup. When margins are too thin, the business survives only as long as nothing goes wrong.
Why thin margins are dangerous Every business has costs that do not belong to a specific job. Vehicles, fuel, insurance, tools, phones, admin, bookkeeping, and compliance all continue whether work is steady or slow. If margins are too low, one quiet month, one unpaid invoice or one come-back job can erase weeks of hard work.
Healthy trade businesses typically aim for gross margins between 35 – 50 %, depending on the trade, risk and level of competition. That buffer allows reinvestment, stability and resilience.
Pricing labour properly Your hourly rate is not what you want to earn personally. It is what the business must charge to remain viable. That rate must cover your salary, downtime, non-billable hours, admin time, overheads and profit. If you only charge for time spent on site, you are underpricing your work. Travel, quoting, sourcing materials, and followups are all part of delivering a job. They must be priced in.
Materials are not pass-through items Many tradespeople apply little or no markup on materials, believing this is fair. In reality, materials involve time, cash flow pressure, price risk, and warranty responsibility. A sensible markup on materials compensates for those risks. It is not greed. It is good business.
Profit has a purpose Profit allows you to replace tools, hire help, survive slow periods, and say no to bad jobs. It also creates a business that has value beyond your own labour. Before accepting any job, ask one simple question. If you did this job every week for a year, would your business be stronger or weaker?
If the answer is weaker, the price is wrong •
About the author: Rob Burger CA( SA) is a finance and strategy consultant who helps small businesses, contractors and professionals simplify their finances and grow sustainably. He has 30 years of experience in business and now focuses on helping SMEs build stronger, more profitable enterprises. He is reachable at robburger @ 2xrconsulting. co. za or WhatsApp + 27( 0) 61 588 0497.
www. africanmining. co. za African Mining Publication African Mining African Mining • April 2026 • 31