For many small business owners, winning new clients feels like proof that the business is heading in the right direction. More enquiries, more jobs and a full calendar often create the impression that success is just around the corner.

Yet for many Australian businesses, the reality tells a different story.

Despite being fully booked, there is little profit left at the end of the month. Cash flow remains tight, bills continue to pile up, and owners find themselves working longer hours without seeing the financial rewards they expected.

In this episode of The Account Rant, Catarina Santini, Client Director at Latitude Accountants, and Michael Saade, CA, Client Director at Latitude Accountants, discussed one of the biggest reasons they see this happen—underpricing.

Their message was simple but powerful: if your pricing doesn’t cover your overheads, wages, contractor costs, materials and the profit your business needs to grow, you’re not building a sustainable business. You’re funding one.

For Australian business owners, tradies and service providers alike, understanding how to price correctly could be the difference between simply staying busy and building a profitable business.

What Happened?

During the podcast discussion, Catarina Santini and Michael Saade explored one of the most common mistakes they encounter when working with small business owners.

Rather than calculating what their business actually needs to earn, many owners look at competitors first.

They assume that being the cheapest option will help them attract customers quickly.

While this approach may generate work in the short term, it often creates a much larger problem.

Businesses become locked into pricing that doesn’t reflect their true operating costs. Months later, they realise they need to increase their prices dramatically just to remain profitable—only to risk losing customers who were attracted primarily by low prices.

Instead of chasing competitors, Catarina and Michael explain that business owners should understand their own numbers first and develop pricing that supports long-term sustainability.

Why This Matters for Australian Small Business Owners

Pricing influences almost every aspect of a business.

It affects profitability, cash flow, hiring decisions, business growth and even the owner’s personal income.

Unfortunately, many business owners focus only on generating revenue without asking a more important question:

“Am I actually making money?”

Winning more work is meaningless if every project leaves little or no profit after expenses.

This is especially common during the first year of business, when owners are eager to establish themselves in the market.

Offering lower prices may seem like an effective marketing strategy, but if those prices don’t cover the true cost of operating the business, every new client can actually increase financial pressure instead of reducing it.

The result is a business that appears successful from the outside while quietly struggling behind the scenes.

Stop Looking at Your Competitors—Start Looking at Your Numbers

One of the strongest messages from the episode is that pricing should never begin with your competitors.

Instead, Michael explains that the first step is understanding what it actually costs to operate your business.

That means identifying expenses such as:

• Rent or premises costs
• Employee wages
• Contractor payments
• Equipment and tools
• Insurance
• Software subscriptions
• Marketing expenses
• Vehicle and fuel costs
• Utilities
• The salary you want to pay yourself

Only once these figures are understood can you work backwards to determine the level of revenue your business needs to generate.

This creates pricing that supports profitability rather than simply matching whatever another business happens to charge.

Every business has different overheads, different goals and different operating models.

Trying to compete solely on price ignores those differences and can quickly erode your profit margins.

The Pilates Studio That Changed Its Pricing Strategy

To demonstrate this approach, Michael shared the example of a client operating a Pilates studio.

Together, they reviewed the business’s pricing model by comparing the average fee charged per class with the amount being paid to instructors.

The review revealed that approximately half of the revenue from each class was already being used to pay instructors.

Once operating expenses such as rent, administration, utilities and the owner’s desired salary were factored into the equation, it became clear the business wasn’t generating sustainable profits.

The studio had also relied on heavily discounted promotional offers to attract customers during its early months.

While these promotions helped build awareness, they weren’t designed to become permanent pricing.

Michael explained that promotions can be an effective marketing tool when used strategically, but they should never replace a pricing model that allows the business to remain financially healthy over the long term.

The lesson is simple.

Attracting customers is important.

Building a profitable business is even more important.

Being Busy Doesn’t Mean You’re Profitable

One of the most valuable insights from Catarina and Michael is that activity should never be confused with profitability.

Many business owners proudly say they’re booked weeks or even months in advance.

However, if each job is underpriced, being busier simply means working harder for less reward.

It’s entirely possible to have record sales while making very little profit.

That’s why financial reporting matters just as much as winning new clients.

Regularly reviewing profit margins, operating costs and pricing allows business owners to identify problems before they become serious.

Without those reviews, businesses often continue operating under the false belief that more work automatically means greater financial success.

As Catarina and Michael explain throughout the discussion, sustainable businesses aren’t built on volume alone—they’re built on pricing that reflects the true value and cost of the work being delivered.

Why Reviewing Your Prices Every Year Matters

One of the simplest yet most overlooked business habits discussed by Catarina Santini and Michael Saade is reviewing your pricing consistently.

Many business owners only think about increasing prices when they begin feeling financial pressure. By that stage, operating costs may have increased significantly, forcing them to introduce a much larger price rise than customers were expecting.

Instead, Catarina recommends making pricing reviews part of your annual business planning.

Whether you choose to review your prices every January, at the beginning of the financial year or another consistent time each year, the important thing is having a structured process.

Regular reviews allow you to consider changes such as:

• Rising supplier costs
• Wage increases
• Higher insurance premiums
• Increased software and technology expenses
• Rent and utility increases
• Improvements you’ve made to your products or services

Small, consistent adjustments are often easier for customers to understand than sudden, substantial increases after several years of unchanged pricing.

Having a regular review process also gives business owners confidence that their pricing continues to reflect the real cost of running the business.

Inflation Doesn’t Just Affect Households—It Affects Businesses Too

Inflation was another key topic discussed during the episode.

When the cost of goods and services rises across the economy, businesses inevitably feel that pressure.

Materials become more expensive.

Contractors increase their rates.

Fuel prices fluctuate.

Insurance premiums rise.

Software subscriptions cost more.

If your business absorbs every one of those increases without reviewing your own pricing, your profit margins gradually shrink.

As Michael explains, maintaining the same prices year after year doesn’t necessarily mean you’re standing still—it often means you’re quietly earning less than you were before.

Reviewing prices in line with changing business costs helps ensure your business remains sustainable while continuing to deliver quality products and services.

Why Tradies Need to Protect Their Cash Flow

While pricing affects every industry, Catarina and Michael highlighted that trades and construction businesses often face additional challenges.

Unlike many professional service businesses, tradies need to purchase materials, pay subcontractors and cover labour costs long before the final invoice is paid.

If a quote doesn’t accurately reflect those costs—or if payment is delayed—the business owner carries much of the financial risk.

That’s why Michael strongly encourages business owners to request deposits before starting work.

Deposits provide several important benefits, including:

• Helping cover the cost of materials.
• Reducing upfront cash flow pressure.
• Demonstrating a client’s commitment to the project.
• Lowering the financial risk if payments are delayed later.

For larger projects, stage payments can provide even greater protection.

Rather than waiting until the entire project is complete, businesses receive payments at agreed milestones throughout the job.

This creates healthier cash flow while reducing the likelihood of funding a project from the business owner’s own pocket.

Should You Charge for Quotes or Call-Out Fees?

Another practical topic discussed during the episode was charging for quotes.

Many trades and service providers spend hours preparing detailed quotes, conducting site visits or travelling to potential clients without receiving any payment if they don’t win the work.

Catarina explained that, in some situations, charging a call-out fee or quotation fee can be entirely reasonable.

Some businesses even credit that amount towards the final invoice if the customer proceeds with the project.

This approach recognises that professional advice and time have value.

It can also help reduce enquiries from people who are simply collecting multiple quotes without any genuine intention of engaging your services.

Every business should assess whether this approach suits its industry, customer expectations and operating model, but it’s an important reminder that your expertise is part of what clients are paying for.

Common Pricing Mistakes to Avoid

Throughout the discussion, Catarina Santini and Michael Saade identified several mistakes that regularly affect small businesses.

Avoiding these common pitfalls can improve profitability and support long-term business growth.

Some of the biggest pricing mistakes include:

• Competing solely on price instead of value.
• Setting prices before understanding your operating costs.
• Forgetting to include your own salary when calculating pricing.
• Leaving prices unchanged for several years.
• Relying on promotional pricing for too long.
• Ignoring the impact of inflation on profitability.
• Starting projects without requesting deposits where appropriate.
• Continuing work despite unpaid progress payments.
• Assuming a busy schedule automatically means a profitable business.

Pricing isn’t simply about winning more jobs.

It’s about ensuring every job contributes to the long-term success of your business.

Frequently Asked Questions

Should I always try to be the cheapest business in my industry?

Not necessarily. Pricing should reflect your costs, the value you provide and the level of profit your business needs to remain sustainable.

Why do businesses underprice themselves?

Many new business owners focus on attracting customers quickly without fully understanding their operating costs and required profit margins.

How often should I review my pricing?

Reviewing your pricing at least once a year helps ensure it continues to reflect rising business costs and changing market conditions.

Is it okay to increase prices because of inflation?

Businesses should regularly review pricing alongside increasing operating costs to determine whether adjustments are appropriate.

Can promotional pricing help a new business?

Yes. Promotions can attract new customers, but they should remain temporary rather than becoming your permanent pricing model.

Why are deposits important?

Deposits improve cash flow, help cover upfront costs and reduce the financial risk associated with large projects.

What are stage payments?

Stage payments allow businesses to receive agreed payments throughout a project instead of waiting until completion.

Should I charge for quotes?

Depending on your industry, charging for detailed quotes or site visits may help ensure your time and expertise are properly valued.

Does being fully booked mean my business is successful?

Not always. A business can have a full schedule while still making little or no profit if its pricing is too low.

How can an accountant help with pricing?

An accountant can help analyse your costs, margins and cash flow to develop a pricing strategy that supports sustainable business growth.

Final Thoughts

Pricing is about much more than attracting customers.

It’s about building a business that can consistently generate profit, support future growth and provide financial security for both the business and its owner.

As Catarina Santini and Michael Saade explain throughout this episode of The Account Rant, sustainable pricing starts with understanding your numbers—not your competitors’.

By reviewing your pricing regularly, factoring in rising costs, protecting your cash flow and ensuring every job contributes to profitability, business owners place themselves in a far stronger position for long-term success.

Winning work is important.

Winning profitable work is what builds a sustainable business.

Need Help Reviewing Your Business Pricing Strategy?

If you’re unsure whether your pricing accurately reflects your operating costs, supports healthy cash flow or delivers the profitability your business needs to grow, now is the time to review your pricing strategy.

At Latitude Accountants, we help Australian business owners develop practical pricing strategies backed by accurate financial data—not guesswork. By reviewing your costs, margins and cash flow, our experienced team can help you improve profitability, strengthen your financial position and make more confident business decisions. Whether you’re starting a new business or reassessing your current pricing model, we’re here to help you build a more sustainable and profitable future.

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📞 1300 706 597
📧 info@latitudeaccountants.com.au

Disclaimer

This article is based on discussion points shared by Catarina Santini and Michael Saade, CA, during an episode of The Account Rant podcast and is intended for general educational purposes only. It does not constitute accounting, taxation, financial, legal or business advice. Every business operates differently, and pricing decisions should take into account your individual circumstances, industry and financial objectives. Before making significant business decisions, seek professional advice from a qualified adviser.