Contractor Agency Margin Calculator NZ
This contractor agency margin calculator compares the rate a recruitment agency charges its client for your time with the rate it pays you, and shows the gap in every form you are likely to meet. When you contract through an agency, the client pays the agency, the agency pays you, and the difference is the agency's margin. It can be quoted as a percentage, but the same dollar gap gives two different percentages depending on what it is divided by: as a share of the charge rate it is a margin, and as a share of your pay rate it is a markup, which is always the larger number. Knowing which one someone means matters when you are comparing offers or asking for a better rate. You enter the charge rate and the pay rate per hour, both excluding GST, the hours you work a week and the weeks you work a year. The calculator gives you the margin as a share of the charge rate, the margin per hour, the markup on your pay rate, the agency's margin over a year and your own gross pay for the same hours. You need the charge rate to use it: if you do not know it, a direct question to the agency is the place to start. The page makes no claim about what a fair margin is.
From the same team as Calculate.co.nz
Your Timesheets at jobtracker.co.nz logs your hours on a week grid or a timer that keeps counting when your phone locks, free on every plan. Career and Timesheets turns those hours into projects and rates, fixed fees and retainers, numbered invoices with GST only when you are registered, expenses and mileage, and the tax to set aside, from $4.99 a month billed yearly.
Log your hours freeHow it works
The margin per hour is the charge rate less the pay rate. Divided by the charge rate it gives the margin percentage, the share of what the client pays that stays with the agency. Divided by the pay rate it gives the markup percentage, how much the agency adds on top of what it pays you. Your hours a week times your weeks a year give the hours billed in a year: the margin per hour times those hours is the agency's annual margin, and your pay rate times those hours is your annual gross pay before tax and before any costs of your own. Both rates exclude GST, which is added on top by whoever is registered.
Worked example
An agency charges a client $150 an hour for a contractor it pays $125 an hour. The gap is $25.00 an hour, which is 16.7% of the charge rate and a 20.0% markup on the pay rate. Working 40 hours a week for 46 weeks is 1,840 hours, so over the year the agency's margin is $46,000 and the contractor is paid $230,000, from a total of $276,000 charged to the client.
| Line | Per hour | A year, 1,840 hours |
|---|---|---|
| Charged to the client | $150.00 | $276,000 |
| Paid to the contractor | $125.00 | $230,000 |
| Agency margin | $25.00 | $46,000 |
| Margin, $25 / $150 | 16.7% | |
| Markup, $25 / $125 | 20.0% | |
Related calculators
- Contractor True Cost Calculator: what the contractor actually costs once every cost is counted.
- Contract Rate to Salary Calculator: your pay rate expressed as a salary.
- Contractor vs Employee Calculator: contracting compared with a permanent job.
- Schedular Payments Calculator: the withholding tax taken from what the agency pays you.
- Contractor Effective Hourly Rate Calculator: your real rate after unbilled hours and costs.