Charge-out rate

Charge-out rate calculator for tradies

Work out what an hour has to sell for to leave you the income you actually want — after the hours you never invoice, the overheads nobody counts, and the KiwiSaver nobody pays you.

Free, and there's nothing to sign up forNo email, no account, no results-by-download. Figures for New Zealand from IRD and the statutory sources listed under the calculator.
Fine-tune your numbersBusiness overheads a year, weeks you work a year, set money aside for retirement and what you charge now
At the rate an employer would have to pay an employee in this market. Working for yourself doesn't make it optional, it just makes it yours to remember.
You need to charge$91.61an hour, before GST

This is what an hour has to sell for to leave you the income you asked for.

Hours you actually invoice33 hoursYou work 45 a week. Quoting, chasing and driving take 12 of them, so 33 are left to charge for — and every cost below has to come out of those.
Billable hours a year1,504.8 hours33 a week across 45.6 weeks.
Income you asked for$110,000.00
KiwiSaver employer contribution set aside$3,850.003.5% of your income, the rate New Zealand mandates for an employee. Nobody pays it for you.
Business overheads$24,000.00Vehicle, insurance, tools, phone, software, accounting.
Total the year has to cover$137,850.00
Your rate including GST$105.35What the customer sees on the invoice, once 15% is added.

How the number is worked out

Every cost your business has to cover in a year gets divided by the hours you can actually invoice. That's the whole calculation — the reason most tradies undercharge is not the arithmetic, it's the two numbers that go into it.

  • The hours are wrong. You work 45 and invoice 33. Quoting, chasing, ordering and driving are real work that no customer pays for, so they have to be carried by the hours that are billed.
  • The year is wrong. There are 52 weeks in a year and you don't work them. Take out annual leave and public holidays and you're closer to 46 — and unlike an employee, nobody pays you for the difference.
  • The costs are short. Vehicle, insurance, tools, phone, software and accounting come out before you do. So does your KiwiSaver, if you ever want to stop.

This gives you a floor, not a price. It's the rate at which the year works out — anything above it is profit, and anything below it means you're funding your customers' jobs out of your own income.

Why billable hours matter more than the rate

Put your own numbers in and change one thing: drop the unbillable hours by two. The rate you need falls, because the same costs are spread over more hours you can charge for.

That's usually the easier lever. Raising your rate is a conversation with every customer you have. Getting two hours a week back from quoting and chasing is a change to how you work, and it lands at the same place.

Common questions

Charge-out rate, answered.

No. The rate this works out is what you need to keep, before tax is added. If you're registered, GST goes on top of it on the invoice — the result panel shows you both figures so you don't quote the wrong one.

Both, indirectly. It's the rate an hour of your time has to earn. If you quote fixed-price, multiply it by the hours a job honestly takes — including the travel and the quoting time for the jobs you didn't win — rather than the hours you'd like it to take.

Then one of three things is true: your overheads are higher than theirs, you're invoicing fewer hours than they are, or they're undercharging and haven't worked it out yet. The third is more common than tradies expect. Check the billable hours figure first — it's usually the one doing the damage.

No, it's optional. Leave it blank and you'll get the rate you need. Fill it in and you'll also get the annual figure the gap is worth, which is usually the number that changes minds.

The authority that publishes them — IRD and the statutory sources listed under the calculator, each linked with the month we last checked it. We re-read them at every financial year boundary; the build fails if we haven't.

Because an employee gets it and you don't. In New Zealand an employer has to pay it on top of a wage, so a tradie comparing their own income to an employed rate is comparing two different numbers. Setting it aside out of your own charge-out rate is the only way the comparison is honest — and you can switch it off in the drawer if you'd rather not.
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