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Charge-Out Rate CalculatorThe number you should be charging, worked out properly rather than guessed.

The charge-out rate calculator for Australian and New Zealand trade businesses. Put in what labour really costs you, how many hours you can actually invoice and what the business spends, and it builds the rate that covers all of it and still leaves a margin. Everything is worked out in your browser and nothing you type is sent anywhere.

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A painted scene of Australian trade business owners going over their numbers together in warm golden hour light

Why your rate is probably wrong

Sound Familiar?

Your rate came from asking around

You picked a number years ago because it sounded about right for your area, or because it was a bit under the bloke who kept beating you on price. It has never been built up from a wage, an on-cost, a vehicle or an hour, and it has never been rebuilt since.

You pay for hours nobody ever invoices

Driving between jobs. Quoting on a Sunday. Chasing materials the wholesaler got wrong. Going back to fix something. Every one of those hours is paid for and none of them reaches an invoice, and almost no owner can tell you how many there were last year.

The busiest year you have had, and nothing in the bank

Turnover went up, the crew grew, the diary was full for eleven months, and the account looks the same as it did in January. So you assume it is a cash flow problem, or a tax problem, and price the next job the same way you priced the last one.

Underpricing never arrives as a loss. It arrives as a full diary, a tired body and a bank balance that will not move, and it can do that quietly for years.

The calculator

Work Out Your Real Charge-Out Rate.

Nine numbers, and you have most of them in your head already. Change anything and the rate moves as you type. It all happens in your browser, so nothing you put in here goes anywhere.

What labour costs you

Step 1

What labour costs you

The wage is the smallest part of this. Everything bolted onto it is why a rate built off a wage never holds.

The base wage before super and on-costs. If that person is you, use what you would have to pay someone to do your job on the tools, not what you currently take out.

Superannuation, workers compensation, allowances and leave loading, as a percentage on top of the wage. Your bookkeeper can give you the real figure in about a minute.

Everyone whose hours you can put on an invoice, including you if you are still on them. Office and admin staff are overheads, not this number.

How many hours you can actually bill

Step 2

How many hours you can actually bill

The step every rate calculation skips, and the reason most rates are wrong before the maths starts.

Fifty two, less annual leave, public holidays and the days people are sick. Forty six is a normal answer once you take all three out.

What you pay for, not what gets invoiced. If the crew is paid for thirty eight and works forty five, use what you pay for and fix the rest.

Take out travel between jobs, quoting, chasing materials, yard time, certificates and going back to fix something. Most owners guess ninety and find seventy when they check a fortnight of timesheets.

What the business costs and needs

Step 3

What the business costs and needs

Overheads have to be carried by billable hours, because there is nothing else to carry them.

Everything that is not a person on the tools: vehicles, fuel, insurance, licences, rent, phones, software, accounting, marketing, tools, and the wage of anyone in the office.

The share of the price that is left for the business after everything above is paid. This is a margin, not a markup, and the result below shows you both.

Optional, and it is the one that stings. Put your current rate in and the result shows the gap per hour and what it comes to across a year.

The figures it starts with are round examples so the tool works the moment you land. Replace every one of them with your own.

The working

Wage plus on-costs, per person
$100,000
Paid hours, per person, per year
1,748
Hours you can invoice, per person
1,311
Paid hours nobody invoices
437
Labour, per billable hour
$76.28
Overheads, per billable hour
$45.77
Break-even rate
$122.04
Margin inside the rate
$21.96
The same rate as a markup on cost
18%

The rate is rounded up to the whole dollar, because a price rounded down misses the margin it was built to protect. Every figure here is worked out in your browser. Nothing you type is sent anywhere, stored or logged.

The formula

The Charge-Out Rate Formula, Step By Step.

This is what the calculator is doing. Work it on paper if you would rather, or use it to check a number your accountant gave you.

Step 1

Work out what labour really costs

Take the annual wage for one person on the tools and add on-costs: superannuation, workers compensation, allowances and leave loading. The wage on its own is the smallest part of the number, which is why a rate built off a wage never holds.

Step 2

Work out how many hours you can actually invoice

Multiply the weeks each person really works, after annual leave, public holidays and sick days, by the paid hours in a week. Then take the share of those hours that reaches an invoice. Travel, quoting, chasing materials, yard time and going back to fix something are all paid for and none of them is billable.

Step 3

Divide labour cost by billable hours, not paid hours

This is the step that decides whether the rate is right. Dividing by paid hours gives you the cost of employing somebody, which is a payroll figure and not a price. Every paid hour that never reaches an invoice has to be carried by the hours that do.

Step 4

Add overhead recovery per billable hour

Take everything the business spends that is not a person on the tools: vehicles, fuel, insurance, licences, rent, phones, software, accounting, marketing, tools and office wages. Divide it by the billable hours of everyone on the tools. Overheads have to be carried by billable hours because there is nothing else to carry them.

Step 5

Divide by one minus your margin

Labour plus overhead is your break-even rate: charge it and the business makes exactly nothing. To leave a fifteen per cent margin, divide the break-even rate by 0.85. Do not add fifteen per cent, because adding fifteen per cent to cost leaves about thirteen per cent of the price. That is the difference between a markup and a margin.

Worked through, end to end

One person on the tools on $80,000 a year, plus 25 per cent on-costs, costs the business $100,000. At 46 weeks of 38 hours they are paid for 1,748 hours, and at 75 per cent billable only 1,311 of those hours ever reach an invoice. So 437 paid hours a year have to be carried by the ones that do, which puts labour at $76.28 a billable hour rather than the $57.21 a payroll report would suggest.

Add $60,000 of overheads across those same billable hours, at $45.77 an hour, and the break-even rate is $122.04. Charge that and the business makes nothing at all. Divide it by 0.85 to leave a 15 per cent margin and the rate is $144 an hour, before GST. Those are round example figures, not a benchmark. Put your own in above.

Worth knowing

Why The Number Moves Every Year.

Australian employers must pay superannuation guarantee contributions on top of ordinary time earnings, so a wage is never the full cost of an hour of labour.
Source: Australian Taxation Office, key superannuation rates and thresholds
Minimum pay rates for most Australian construction and trade employees are set by a modern award and reviewed every year, so a charge-out rate built once will fall behind its own labour cost.
Source: Fair Work Ombudsman, pay guides and the Building and Construction Award

What to do with the number

A Rate You Cannot Hold Is Just A Number.

Working out the rate takes two minutes. Quoting it to a builder who says everyone else is cheaper, and not blinking, is the part that takes training. That is the part we do.

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The other half

You Need Both Numbers.

Free tool, no sign-up

Apprentice cost calculator

This page works out what an hour has to be sold for. That one works out what an hour of an apprentice actually costs you, once you count the weeks at trade school, the on-site hours that never reach an invoice, and the supervision time that pulls a qualified tradesperson off their own work. You need the rate above to price that supervision honestly. Same rules: it runs in your browser and nothing you type is sent anywhere.

Work out the real cost

Your trade

Pricing And Profit, In Your Trade.

The rate is the same arithmetic in every trade. What you are up against when you quote it is not, so each of these is written for one trade and names its own regulators, awards and money problems.

Electricians

Pricing and profit

Plumbers

Pricing and profit

Builders

Pricing and profit

Carpenters

Pricing and profit

HVAC Technicians

Pricing and profit

Roofers

Pricing and profit

Landscapers

Pricing and profit

Painters

Pricing and profit

Tilers

Pricing and profit

Concreters

Pricing and profit

Solar Installers

Pricing and profit

Plasterers

Pricing and profit

All twelve trades, and the seven ways we help each one

Questions

Charge-Out Rates, Answered.

How do I calculate my charge-out rate as a tradie?
Add on-costs to the wage to get the true annual cost of one person on the tools. Work out how many hours that person can actually invoice in a year, which is the weeks they really work multiplied by their paid hours, multiplied by the share of those hours that reaches an invoice. Divide the labour cost by the billable hours, add your annual overheads divided by the billable hours of everyone on the tools, and divide the result by one minus the margin you need. The calculator on this page does all of it from your own figures.
What should a charge-out rate include?
Wages, superannuation, workers compensation, allowances and leave loading, plus a share of every overhead the business carries: vehicles, fuel, insurance, licences, rent, phones, software, accounting, marketing, tools and anyone in the office. Then a margin on top, because a rate that only recovers cost is a rate that funds a job and never funds a business. Materials and subcontractors are priced separately with their own markup, not buried in the labour rate.
How many billable hours does a tradie actually have per year?
Far fewer than the hours you pay for, and the gap is the single most common reason a rate is wrong. Start with the weeks each person genuinely works after annual leave, public holidays and sick days, multiply by their paid hours per week, then take out travel between jobs, quoting, chasing materials, yard time, certificates and warranty returns. Most owners guess that ninety per cent of paid hours are billable and find something closer to seventy when they check a fortnight of timesheets. Put both numbers into the calculator above and watch what it does to the rate.
What is the difference between markup and margin?
A markup is a percentage added to your cost. A margin is a percentage of the final price. They are not the same number and confusing them is expensive. Add fifty per cent to a cost of one hundred dollars and you get a price of one hundred and fifty, on which your margin is thirty three per cent, not fifty. To get a fifty per cent margin you would need to charge two hundred. The calculator above works in margin, because margin is what is actually left in the business, and it also shows you the equivalent markup so you can quote either way.
What is the difference between a charge-out rate and an hourly rate?
An hourly rate is usually what somebody is paid. A charge-out rate is what a billable hour is sold for, and it has to carry the paid hours that are never billed, every overhead the business has, and the margin. That is why a charge-out rate is always well above the wage, and why an owner who sets their charge-out rate near their own old wage cannot work out where the money went.
What is the average tradie hourly rate in Australia?
Published figures vary enormously by trade, state, and whether the work is domestic, commercial or new build, and an average is the wrong number to price off in any case. Your rate has to cover your wages, your on-costs, your overheads and your billable hours, and none of those is average. If your rate matches the market but your overheads are higher or your billable share is lower than the businesses setting that market, you will be busy and broke while charging exactly what everyone else charges. Work out your own number and then decide what to do about the market.
Does the calculator include GST?
No. Every figure it asks for and every figure it returns is exclusive of GST. Add GST to the rate when you quote if you are registered. Working in GST-exclusive numbers throughout is the only way the margin figure means anything, because GST is never yours.
Do my figures get sent anywhere?
No. The whole calculation runs in your browser. Nothing you type is stored, logged, transmitted or emailed to anyone, there is nothing to sign up for to see the result, and you can close the page and it is gone. If you want to keep the numbers, write them down or screenshot the working panel.

Now Go And Charge It.

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