Tradie Charge-Out Rate Calculator NZ

This calculator works out the hourly charge-out rate a tradesperson, contractor or small operator in New Zealand needs to charge to cover costs and still take home the income they want, rather than guessing a number or copying an employee wage. You enter four figures: the annual take-home pay you want after tax, your annual overheads such as vehicle, tools, insurance and phone, the number of hours you can realistically bill in a year, and the share of income that goes to tax and ACC. The calculator grosses your target take-home up for tax and ACC, adds your overheads to find the total revenue your business needs to earn, then divides that by your billable hours. It returns the hourly charge-out rate you need before GST, the yearly revenue required, and your gross income before tax. Because billable hours are always far fewer than hours worked, once quoting, travel, admin, leave and downtime are stripped out, and because overheads and your own tax and ACC have to be covered as well, the rate that comes out sits well above an ordinary employee wage. Use a realistic billable-hours figure rather than total hours worked, add GST on top of the result if you are registered, and treat the tax and ACC share as an estimate of your actual position. This figure is a pricing guide only, not financial or tax advice.

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$81
hourly charge-out rate you need (before GST)
Revenue needed per year$113,333
Gross income (pre tax)$93,333

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.

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Frequently asked questions

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.