How do I work out my charge-out rate?

Start from the take-home you want, gross it up for tax and ACC, add your overheads, and divide by the hours you can actually bill. The result is the rate you need to charge, which is well above an employee hourly wage.

Why is a charge-out rate higher than a wage?

A charge-out rate has to cover unbillable time like quoting and admin, overheads such as vehicle, tools, insurance and phone, plus your own tax and ACC. An employee wage is only the pay, with the employer carrying those costs.

What are billable hours?

Billable hours are the hours you can actually charge a client, which is far fewer than the hours you work, after quoting, travel, admin, leave and downtime. Using a realistic billable-hours figure is the key to setting the right rate.

Tradie Charge-Out Rate Calculator

This New Zealand calculator helps tradespeople and small operators work out the hourly charge-out rate they need to cover costs and earn a target income. You enter your desired take-home, billable hours, overheads, tools, vehicle, ACC and tax, and it builds the rate from the ground up. It shows why a charge-out rate must be well above an employee hourly wage to cover unbillable time, overheads and the cost of running a business, helping tradies price their work properly.

Target take-home (annual)

Annual overheads (vehicle, tools, insurance)

Billable hours per year

Tax and ACC share

hourly charge-out rate you need (before GST)

Revenue needed per year$0

Gross income (pre tax)$0

Billable hours are far fewer than hours worked, after quoting, travel, admin, leave and downtime; a realistic figure is the key input. The rate is before GST, which you add if registered. Tax and ACC share is the portion of income that goes to them. Estimate only, not financial advice.

How it works

The calculator starts with the take-home you want and grosses it up for tax and ACC to find the income you need before those. It adds your annual overheads to get the total revenue your business must earn, then divides by your billable hours to give the charge-out rate. Because billable hours are far fewer than hours worked, and the rate must carry overheads and your own tax, the result is well above an employee wage.

Worked example

To take home $70,000 with a 25% tax and ACC share, you need about $93,300 of income. Add $20,000 of overheads and you need $113,300 of revenue. Over 1,400 billable hours, that is a charge-out rate of about $81 an hour before GST, far more than an equivalent wage.

Related calculators

Contractor Day Rate Calculator: day rate and salary.
Self-Employed Take-Home Calculator: your take-home.
GST Calculator: add GST to the rate.
Business Income Tax Calculator: business tax.

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