How to work it out
Add up every wage payment for the year, including super and payroll tax if you pay it, and divide by turnover (sales excluding GST) for the same year. A café paying $210,000 in wages on $600,000 of sales is at 35%.
Be consistent about the owner. The ATO’s ratios come from tax returns, where a sole trader’s or partner’s own pay is not an expense, and its total expenses figure leaves out payments to associated persons. If you pay yourself a wage through a company, compare with and without it.
ATO labour ranges by industry, 2023–24
| Industry | Smallest turnover band | Middle band | Largest band |
|---|---|---|---|
| Coffee shops | 21–32% | 21–32% | 27–35% |
| Restaurants | 18–30% | 23–32% | 27–34% |
| Takeaway food | 16–26% | 15–24% | 19–27% |
| Hairdressers | 23–36% | 25–37% | 32–44% |
| Beauty services | 23–35% | 25–37% | 27–39% |
| Carpentry | 24–39% | 21–35% | 27–43% |
| Plumbing | 21–34% | 16–27% | 23–33% |
| Electrical | 21–35% | 17–30% | 23–34% |
| Clothing retail | 14–22% | 11–19% | 12–18% |
| Health and fitness centres | 21–36% | 22–35% | 19–33% |
| Cleaning (building) | 31–48% | 29–47% | 35–56% |
Source: ATO small business benchmarks, 2023–24 financial year. Turnover bands differ by industry; each industry page shows its own.
Why staff costs drift
- The roster did not follow the sales. Staffing for last year’s peak, or for the busiest hour all day.
- Overtime became normal. Penalty rates on weekends and public holidays that the prices do not cover.
- Award increases without price increases. Wages rise every July; if prices did not, the ratio rises on its own.
- Paid idle time. Staff waiting for work between jobs, appointments or deliveries.
See where your business sits, from your bank statement
Upload a CSV or PDF of your business bank account (3 to 12 months). The health check rebuilds what you really earn, compares each cost with businesses like yours, and shows where money is leaking and who owes you. Free to run: you see how much is at stake before you pay anything.
Any bank, any currency. The file is read once and not kept. Full report from $149.
Bringing it back without cutting service
- Roster to the hour, not the day. Match staff to sales by hour for a typical week. Most of the saving is in the quiet hours.
- Price the penalty days. A weekend or public holiday surcharge that covers penalty rates is common in hospitality and accepted by customers.
- Raise prices with the award. A yearly price review in July keeps the ratio steady. See when to raise prices.
- Measure output per paid hour. Sales per labour hour for a café, billable hours per paid hour for a trade or salon.
Close half the gap to the top of the range before anything else: it is usually achievable within one to three months and does not depend on customers changing.