Free Charge-Out Rate Calculator for Tradies

What is a charge-out rate?

A charge-out rate is the hourly price a trade business charges its customers for labour. It's the number next to the hours on your quote. And it's not what you pay the person doing the work.

Here's why. The rate has to carry the wage, plus everything the wage drags along behind it: super, workers' comp, leave loading. The van. The tools. Insurance, the phone, the accountant, marketing. Your time in the office. The customer who never pays. The job that comes back. Then it has to leave a profit on top.

Now the catch. All of that gets spread over only the hours you can bill. Driving between jobs is paid, not billed. So are quoting, parts runs and waiting on site. That's why a charge-out rate sits well above the wage. In the calculator's starting example it's about four and a half times the plumber's hourly wage.

So here's what the rate really means: what each billable hour must bring in. Not what an hour of work costs. The calculator above works it out from your own numbers.

Is a charge-out rate the same as an hourly rate or a salary?

A charge-out rate is not the same as an hourly wage or a salary. The wage is what you pay for each paid hour. The salary is the same money counted by the year. The charge-out rate is what you bill a customer for each hour on their job, and it has to recover far more.

Take the calculator's starting example. A plumber on $42 an hour. Add an on-cost multiplier of 1.3 for super, workers' comp, leave loading and payroll tax. Now that plumber costs $54.60 for every paid hour.

But they don't bill every paid hour. Only 70% of a 221-day, 8-hour year on site gets billed, against 1,976 paid hours. Spread the plumber's cost over the hours you can bill and it comes to about $87 per billable hour. That's before the van. Before the office. Before a cent of profit.

So when someone asks for “your hourly rate”, they mean the charge-out rate. Put it next to a wage and it'll always look high. It isn't. It's carrying the whole business.

What is the charge-out rate formula?

The charge-out rate formula divides the revenue the business needs in a year by the hours it can bill in that year. Three lines:

Total yearly costs means everything the business spends. Billing staff's wages with on-costs. Apprentices. The owner's salary for office time. Admin. Vans. Overheads. Equipment, spread over its working life.

Bad debts, callbacks and profit work differently. They're percentages of revenue, not costs, because they grow with every dollar you invoice. So you divide by one minus those percentages. That grosses your costs up to the revenue that still leaves your profit once the leakage is gone.

Break-even uses the same formula with profit set to zero: total yearly costs divided by billable hours, after bad debts and callbacks. Charge below it and every billable hour loses money. It doesn't matter how full the diary looks.

How do you calculate a charge-out rate per hour?

Calculating a charge-out rate per hour takes four steps. The first tab of the calculator walks you through each one.

1. Cost everyone the billing staff carry. Their wages times an on-cost multiplier (the 12% super guarantee, workers' comp, leave loading, payroll tax). Plus apprentices, the owner's office salary and admin. None of them bill. So the billing staff's hours pay for all of them.
2. Add vans, overheads and equipment. Each tool's price is divided by its working life in years, plus its yearly servicing.
3. Allow for leakage and profit. Bad debts and callbacks are a percentage of revenue. So is your target profit.
4. Divide by billable hours. Travel, quoting and parts runs are paid but not billed. So they come out before you divide.

The order matters. A rate that's guessed instead of worked out usually misses two things: the hidden people in step one (your office time, the apprentice) and the unbilled hours in step four. That's where the money goes. Quietly. Every single week.

What does a charge-out rate example look like?

A charge-out rate example, using the calculator's starting figures. A plumbing business with three billing plumbers (the owner is one of them) at $42 an hour. One apprentice at $26. The owner takes $20,000 a year for office time. Admin help costs $1,000 a month. Each van costs $2,300 a month. These are example inputs, not industry averages.

Now look at this. If every hour on site were billable, the same business would need only $131 an hour. The $56 gap between the two is what travel, quoting and waiting cost. Nothing else changed.

And at $120 an hour? This business wouldn't cover its costs from labour alone. That's why the materials markup in the price book matters so much.

How do you calculate an employee's charge-out rate?

An employee's charge-out rate is calculated the same way as the business rate. You just start from one person. Take their hourly wage. Multiply by your on-cost multiplier to get their true cost per paid hour, then by their paid hours for the year. Add their share of the van and the tools they use. Then divide by the hours they can actually bill: working days, times hours on site, times their own billable efficiency.

But that figure leaves something out: their share of everything nobody bills for. Your office time. Admin. Overheads. The apprentice.

And here's the trap. A senior plumber who quotes, supervises and fixes callbacks may bill less of the day than a junior who stays on the tools. Similar wage. Higher personal break-even.

Most small businesses use one rate for all qualified staff and a lower one for apprentices. The calculator gives the business-wide rate, the one every billable hour has to average out to. If one person sits well below it, someone else's hours are carrying them.

Does a labour charge-out rate include materials?

A labour charge-out rate does not include materials. It covers time only. Materials go on the quote as their own line, at cost plus a markup.

And that markup isn't just profit on the part. It pays for the time spent sourcing, collecting and carrying stock. The parts that get damaged or sent back. The money tied up in stock before the customer pays.

Here's why it matters. It's the main reason a calculated labour rate often looks higher than what the tradies around you charge. The calculator's first tab puts every cost onto labour hours. But a business making a real margin on materials, call-out fees and after-hours work recovers part of its overheads there instead. So its labour rate can sit lower and still make money.

The job price book tab shows both at once: labour at your rate, materials with your markup, disposal and any compliance fee. You see what the whole job is worth, not just the hourly rate. Charging less than your calculated labour rate? The price book is where you prove the gap is covered.

What should an electrician's charge-out rate cover?

An electrician's charge-out rate should cover the same core costs as any trade, worked out with the award and the gear that apply to electrical contracting. Employed electricians in Australia generally fall under the Electrical, Electronic and Communications Contracting Award 2020 (MA000025), not the plumbing award. Check its penalty rates, allowances and on-call rules. Do it before you fill in the after-hours tab.

The equipment list changes too. Swap the plumbing tools for yours. Test and tag gear. Insulation testers. Cable locators. Thermal cameras. Ladders and gear for working at height. Plus the cost of servicing and calibrating all of it. Licence renewals and compliance certificates go in overheads. So does any switchboard or solar accreditation.

One more thing. Some electricians spend more of the day testing and doing paperwork than installing. That lowers their billable efficiency, and the rate has to rise to match. Enter your electricians where it says plumbers. Once the inputs are yours, the sums are exactly the same.

What should a carpenter's charge-out rate cover?

A carpenter's charge-out rate should cover wages and on-costs under the right award, the tools and the vehicle, and an honest count of billable days. Employed carpenters are generally covered by the Building and Construction General On-site Award 2020 (MA000020). It has its own allowances, so use its figures, not the plumbing award's, when you set the on-cost multiplier.

Carpentry often runs differently from service plumbing. A lot of the work is priced by the job, not the hour. Days run longer on one site, with less driving. And weather and other trades cause downtime nobody pays for.

That makes billable efficiency the input to set with care. A carpenter on one renovation for a fortnight may bill most of every day. One doing small repairs across town bills far less.

Quote by the job? The charge-out rate is still the floor under every price. Estimated hours times your rate, plus materials at markup: that's the least the job price has to cover.

What makes a charge-out rate calculator for Australia different?

A charge-out rate calculator for Australia has to include costs that overseas tools leave out or get wrong. Start with the super guarantee: 12% of ordinary time earnings from 1 July 2025. Modern awards set minimum wages, penalty rates and allowances. The plumbing award adds 17.5% leave loading, plus an extra week of annual leave for staff on call 26 or more weekends a year. Workers' comp premiums are set by each state's scheme. Payroll tax only kicks in above your state's threshold.

Then there's GST. Prices are quoted ex GST, with 10% on top if you're registered. In Queensland, notifiable plumbing work also carries the QBCC Form 4 fee, and the price book adds it to any job that needs one.

And award wages move every year after the Fair Work Commission's annual wage review, usually from 1 July. A rate set last year is already out of date.

US calculators talk about benefits, mileage and self-employment tax. They miss most of this. That's why this one starts from Australian rules.

How should you charge for travel and kilometres?

Travel should be charged one of two ways. Never both.

Way one: leave travel inside the charge-out rate. Driving time counts as unbillable. That lowers billable efficiency and pushes the hourly rate up, so every customer pays a share of travel, near or far.

Way two: bill travel on its own. A travel fee, travel time at your rate, or a charge per kilometre for jobs outside your usual area.

Bill it separately? Then raise your billable efficiency in the calculator to match. Otherwise you're charging for the same hours twice.

A per-kilometre charge should cover the van's running cost per kilometre (fuel, tyres, servicing, depreciation) plus the driver's time. The after-hours tab has a vehicle cost per kilometre input for exactly this. Work it out from your own figures: a year of van running costs divided by the kilometres the van does in a year.

Whichever way you pick, put it on the quote. The customer should know before the job starts. Not when the invoice lands.

Why is billable efficiency the number that matters most?

Billable efficiency matters most because you pay for every hour on site and get paid for only some of them. It's the share of a working day that ends up on a customer's invoice. The rest goes on driving, quoting, parts runs, site inductions, waiting on another trade, callbacks and paperwork.

The calculator shows you the damage. It draws the rate twice: once as if every hour were billable, once at your real efficiency. In the starting example that's $131 against $187. Nothing else about the business changed.

Drop efficiency from 70% to 60% and the rate climbs again. Raise it and the rate falls. That makes it a bigger lever than almost any single cost. And it's the one most guessed rates leave out completely.

So measure it. Don't guess. Take a few real weeks of timesheets and divide the hours on invoices by the hours paid. The answer is usually lower than owners expect. Knowing it is the first step to raising it.

How do you work out an after-hours call-out fee?

An after-hours call-out fee is worked out by spreading the yearly cost of being on call across the after-hours jobs you expect. Then you add the extras each night job carries. Your daytime rate already pays the yearly overheads, so the fee only has to recover what working at night adds.

For a plumbing business, that starts with the on-call allowance for every rostered week. Then the extra week of annual leave the Plumbing and Fire Sprinklers Award gives staff on call 26 or more weekends a year. Then after-hours phone answering.

Each job adds more on top. Penalty wages for unbilled travel and the award's minimum call-back time. The van's running cost. And a slower next morning after a 2am job.

The after-hours tab adds it all up. It shows the minimum call-out fee, and the after-hours hourly rate once the included time runs out.

One warning. Take few after-hours jobs and the fee rises sharply. Same roster cost. Fewer customers sharing it.

What do the price book and add-on tabs do?

The price book and add-on tabs turn your hourly rate into prices you can quote on the spot. The job price book lists common jobs with their minutes, materials, disposal and minimum price. Each price is labour at your calculated rate, plus materials with your markup, plus disposal, plus the QBCC Form 4 fee for notifiable work in Queensland. Type quantities into the Qty column and it builds a sample quote, GST and all.

The safety add-ons tab works out what small extras offered on every job are worth over a year. A flexi hose. An isolation valve. A hot water relief valve. Leak sensors.

You set a take-up rate for each. Some are marked free, like a stopcock test, because they cost you minutes and earn the next call-out. The tab counts the parts, the plumber's time and the cost of the free checks. So the yearly figure is gross profit, not just revenue.

Both tabs run off the rate from the first tab. Change your costs once and every price follows.

How does this compare with Tradify's charge-out rate calculator?

This calculator and Tradify's free billable rate calculator both work out an hourly rate. They just start from different places. Tradify's tool works from your annual overheads and the income you want to earn, and Tradify offers versions for several trades. It's quick. A good first check.

This one digs into more of the costs that hide inside a trade business. Billing staff and apprentices with their on-costs. The owner's office time. Each van. Each piece of equipment over its working life. Bad debts and callbacks as a share of revenue.

Then it carries the rate further. To an after-hours call-out fee built from the award's on-call rules. To a job price book with materials markup and the QBCC Form 4 fee. To the yearly value of safety add-ons.

Already quote in Tradify, ServiceM8 or similar job software? Then the rate and prices you work out here are what you enter there, as your labour rates and price list. The two don't compete. One works out the numbers. The other uses them.

What do you do once you know your rate?

Once you know your rate, it has to reach every quote. And quoting is arithmetic most tradies do in their head on a busy day.

That's what Delegator is being built for. Ring a number from the ute. Say what the job needs. A quote priced from your own price book comes back for you to approve before it goes to the customer. The same system will send invoices and remind you who to chase. I'm looking for a handful of plumbers to pilot it. Tick the box on the rate card form if you want in.

Pricing is the first of six pressures that decide whether a trade business pays its owner properly. In the practical order most owners feel them:

1. Making enough profit from the work: pricing and quoting
2. Getting paid and keeping cash available
3. A dependable supply of worthwhile work
4. Admin, and the business depending on the owner for everything
5. Delivering the work reliably as demand grows
6. Controlling scope and customer expectations

The order shifts with the business. A new sole trader worries about finding work first. A growing team worries about staff. If one of the others is costing you more right now, pick the one that fits and take the first fix free.