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What Should My Hourly Rate Be?
Work out what you need to charge per billable hour to pay yourself properly, cover your overheads and make a profit. Use your own numbers. Change any assumption.
Your result
Enter your figures to see your result straight away. Nothing is sent anywhere.
Saved on this device only, for 30 days. Nothing is sent to BuzzBrain.
Knowing your rate is step one. BuzzBrain Time Boost helps you use it: it works out the true cost of each job before you quote, keeps quotes moving and shows what each job actually made. Free during private beta testing on iPhone and iPad.
See BuzzBrain Time Boost →Your results, explained
How it's worked out
Your pay, super and overheads for the whole year are spread across the hours a customer actually pays for. Profit goes on top, then GST if you're registered.
- Working weeks(52 × days a week − leave − public holidays − sick days − downtime) ÷ days a week
- Billable hours a yearWorking weeks × billable hours a week (plus your staff's billable hours)
- True cost per billable hour(Your pay + super + any staff wages, super and on-costs) ÷ billable hours
- Break-even hourly rate(Those labour costs + overheads) ÷ billable hours
- Charge-out rate using a marginBreak-even rate ÷ (1 − margin %)
- Charge-out rate using a markupBreak-even rate × (1 + markup %)
- Including GSTCharge-out rate × 1.10, only if you're registered for GST
Your pay is spread over billable hours only, because those are the only hours a customer pays for. That's why the rate is always well above your wage.
Worked example
A sole-trader electrician wants to earn $80,000 a year before tax and pays themselves 12% super. Overheads come to $33,000 a year. They work 45 hours a week and can bill 30, take 20 days' leave, 10 public holidays, 5 sick days and 5 weather days, and want a 15% margin. They charge $95 an hour now.
| Pay wanted a year | $80,000 |
|---|---|
| Super | 12% |
| Overheads a year | $33,000 |
| Hours worked / billed a week | 45 / 30 |
| Days off a year | 40 |
| Target margin | 15% |
| Pay per hour worked | $40.40 |
|---|---|
| True cost per billable hour | $67.88 |
| Break-even rate | $92.88 |
| Suggested charge-out rate | $110 |
| Including GST | $121.00 |
The exact rate is $109.27, rounded up to $110. A 15% margin is the same as a 17.6% markup. At $95 an hour, with nothing left for profit, their pay would be about $82,500.
Assumptions
- All money figures are for a year. If you're registered for GST, enter costs excluding GST. If you're not, enter them including GST, because you can't claim it back.
- Super starts at 12%, the super guarantee rate from 1 July 2025 (ATO). Change it, or set it to 0%.
- Hours, leave and days off start with assumptions you can change. They're not industry averages.
- The rate covers your time and overheads. Materials are priced separately on each job.
- Income tax, payroll tax and award minimum rates aren't included. Staff must be paid at least the relevant award.
- GST is shown at 10%. Businesses must register for GST once GST turnover reaches $75,000 a year.
This calculator gives an estimate based only on the figures and assumptions you enter. It's a guide to help you think about your rate, not financial, accounting or tax advice.
FAQ
Hourly Rate questions. Answered.
Why is my charge-out rate so much higher than my wage?
Because customers only pay for billable hours. Your pay, your super and every business cost have to come out of those hours. Travel, quoting, admin, callbacks, leave and rain days all take hours out of the year that nobody pays for.
What's the difference between the break-even rate and the charge-out rate?
The break-even rate covers your pay, super and overheads with nothing left over. The charge-out rate adds profit: money the business keeps for tax, quiet months, replacing gear and growth.
Should I use a margin or a markup?
Either. They're two ways of describing the same profit. Margin is profit as a share of the price. Markup is profit as a share of cost. A 15% margin is about a 17.6% markup. A margin must be under 100%.
Should my hourly rate include GST?
If you're registered for GST, add GST to your rate and pass it on to the ATO. It isn't income. If you're not registered, you don't add GST. You must register once your GST turnover reaches $75,000 a year.
Does the rate cover materials?
No. It covers your time and your overheads. Price materials separately on each job, with your own markup.
How do I work out my billable hours?
Look at a normal week and count only the hours a customer is charged for. Travel, quotes, admin, supplier runs and fixing your own mistakes usually aren't billable. If you're not sure, track a few weeks.
Should I include super if I'm a sole trader?
Sole traders don't have to pay themselves super, but it's part of the real cost of your time if you want to save for retirement. If you work through a company and pay yourself a wage, super rules may apply. Check with your accountant.
Your next step
BuzzBrain Time Boost
Knowing your rate is step one. BuzzBrain Time Boost helps you use it: it works out the true cost of each job before you quote, keeps quotes moving and shows what each job actually made. Free during private beta testing on iPhone and iPad.
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