How to Charge Clients for Travel When Fuel Hits $3 a Litre

Mar 27
3 min read

Updated: Mar 31

If you run a service business, you already know the pain of filling up the work ute right now. With fuel prices hitting $3 a litre in some places, driving across town to see a client or get to a job site is eating into your profit margins faster than ever.

It’s getting rough out there, and lots of Canberra tradies, trainers, and service providers are asking the same question: “How much should I charge my clients for travel so I don't go backwards?”

The most common mistake we see business owners make is simply trying to cover the cost of the liquid in the tank. But if you are only charging for petrol, you are ripping yourself off.

Here is why, and exactly how much you should actually be charging.

The Problem: The "Invisible" Costs of Driving

Let’s say you drive a typical dual-cab ute. Even if you are loaded up with gear and sitting in stop-start traffic, you might be burning around 12 Litres of fuel per 100 kilometres. At $3.00 a litre, your actual liquid fuel cost is about 36 cents per kilometre. If you drive 50kms to a client and charge them a flat $18 to cover the petrol, you might feel like you broke even. But you didn't. Every time you turn the key, you are also paying for:

Tyre wear and tear
Brake pads and scheduled servicing
Commercial insurance
Vehicle registration
Depreciation (the dropping resale value of your vehicle)

These are fixed, massive costs. If you aren't passing a fraction of these expenses onto the client for every kilometre you drive for them, you are paying for them out of your own pocket.

The Solution: The 88-Cent Benchmark

So, what is the magic number to charge? The smartest, fairest way to price your travel is to use the Australian Taxation Office (ATO) standard mileage rate. For the current financial year, the ATO has benchmarked the true cost of running a vehicle at 88 cents per kilometre.

The ATO doesn't just make this number up; it is heavily researched to ensure it covers fuel plus all the invisible maintenance and holding costs. If you charge a client 88 cents per kilometre:

36 cents goes straight into the fuel tank.
52 cents is left over as a "Maintenance & Rego Buffer".

If you drive 15,000 work kilometres a year and collect that 52-cent buffer, you generate nearly $7,800. That is more than enough to comfortably pay for your rego, commercial insurance, a new set of all-terrain tyres, and a couple of major services without touching your actual business profits.

Don't let the "5,000 km Tax Cap" confuse you

You might have heard that the ATO limits you to claiming a maximum of 5,000 kms a year using the 88-cent method on your tax return. That is true for taxes, but it has absolutely nothing to do with your business pricing. There is zero limit on how many kilometres you can charge your clients for. We simply use the 88-cent figure because it is the most accurate, fair benchmark to ensure you aren't losing money on the road.

Get Our Free Travel Pricing Calculator

We know that figuring out exactly what to add to a quote or invoice can be a headache, so we've built a tool to do the heavy lifting for you. We’ve created a free Travel Cost & Fuel Pricing Calculator for tradies and service businesses.

You simply type in the kilometres for the job and the current price per litre for fuel, and the Excel spreadsheet automatically calculates: