Project Pricing Models for AU Service Businesses

Generally — fixed-fee or productised services produce the best margin (45–65% gross) for solo and small-team operators because they reward efficiency. Retainers produce the best predictability of revenue. Value-based produces the highest absolute margin but only works at senior level with measurable outcomes. Hourly produces the worst margins on average because efficiency improvements reduce your own income.

Three steps. (1) Track your hours on hourly engagements until you have 6+ similar projects on record. (2) For new prospects, lead with fixed-fee from the first conversation — never present an hourly option. (3) For existing clients on hourly, offer them a 'package upgrade' at their renewal — a fixed quarterly or annual deal that's 5–10% cheaper than their average hourly spend. Most accept; the rest stay hourly and gradually churn naturally.

Functionally similar — both are recurring fees for ongoing service. The terminology difference matters for positioning. 'Retainer' implies expert access and bespoke work (legal, advisory, consulting). 'Subscription' implies productised, repeatable delivery (SaaS, content packages, support tiers). For service businesses, calling it a 'retainer' typically supports higher prices than calling the same thing a 'subscription'.

Generally no — if the sub-contractor provides a valid ABN on their invoice, no withholding applies. The exception is the 'no-ABN withholding' rule: if an invoice lacks an ABN (and isn't exempt), you must withhold 47% and remit it to the ATO. Separately, if the sub-contractor is actually a deemed employee under the contractor-vs-employee tests, you must withhold PAYG and pay super — even with an ABN. Don't use ABN status as a shortcut to avoid employment characterisation.

Paid discovery at a fixed price ($2k–$8k depending on engagement size) is the gold standard. It (a) pre-qualifies serious buyers, (b) reveals real scope before you commit to a number, (c) generates a deliverable the buyer can act on even if they don't continue. The discovery fee is often credited against a full engagement if it proceeds. Never quote a six-figure project from a single 30-minute call.

Industry standard is 1.5×–2× the cost rate. If you pay a sub-contractor $100/hr, you bill the client $150–$200/hr. The markup covers (a) your overhead in supervising and quality-assuring their work, (b) the risk of payment timing mismatches, (c) account management. Below 1.5× markup, you're working for free. Above 2.5× markup, you're vulnerable to being disintermediated when the client and sub-contractor figure out the gap.