Charge-Out Rate Calculator for Trades & Services

Is the charge-out rate the hourly rate on the invoice?

It is a planning rate for a billable hour under the costs, utilisation and margin entered. A contract may price travel, call-outs, materials and after-hours work separately. Compare the calculated rate with how your actual quotes recover those costs before changing customer prices.

Do I add overhead to the charge-out rate?

The employee on-costs cover the amounts entered in the form. Business overhead such as rent and administration needs a separate allocation if it is to be recovered through labour. Add a reasonable annual allocation to costs and avoid counting the same expense twice.

What is included in the true cost of an employee?

Everything the business pays because the person is employed. Start with base salary. Add the superannuation guarantee, 12% of ordinary time earnings up to the maximum contribution base. Add workers compensation premium, a percentage of remuneration (wages plus super) set by the insurer for your industry (1% to 2% is typical). Add payroll tax if your total Australian wages, including super, exceed your state’s threshold; because the tax applies at the margin, every extra dollar of wages above the threshold is taxed at the full rate, so the calculator computes the tax the hire causes rather than an average. Then add the on-costs: laptop and phone, software licences, a vehicle, uniform and protective equipment, training, and recruitment spread over expected tenure. Leave entitlements are not an extra cost (they are paid within the salary) but they reduce the hours you get, which is the next question.

How many productive hours does an employee work in a year?

Far fewer than 52 weeks of 38 hours. Take out 4 weeks of annual leave, 10 days (2 weeks) of personal leave that most employees use, and the public holidays that fall on weekdays (11 in most states in 2026, 13 in Victoria), and a full-time employee is at work for about 43.8 weeks, or 1,664 hours. Training days, conferences and paid parental leave reduce it further. Dividing the total annual cost by productive hours, not paid hours, gives the number to use in job costing, quoting and pricing labour; the calculator shows both so the difference is visible, usually about 19% between the two.

How do you calculate a charge-out rate?

Start from cost per productive hour, divide by the utilisation rate you can achieve (the share of productive hours that end up on an invoice; 70% to 85% for trades, 60% to 75% for consulting), which gives the break-even rate per billable hour, then divide by one minus your target margin. For the worked example, $64.77 per productive hour at 75% utilisation is $86.36 to break even, and a 30% margin makes the charge-out rate $123.36 ex GST, $135.70 inc GST. If you want overhead recovery (rent, admin staff, insurance) built in, add it to the margin or to the on-costs; the calculator’s charge-out page walks through the same figures with the rate first.

Where do these figures come from in an ERP?

From payroll and job costing working together. Payroll carries the salary, super, workers compensation class and payroll tax; the job costing module carries the cost rate per employee (the cost per productive hour from this page) and the charge-out rate per role, so every timesheet line posts a cost and a billable value. When rates change on 1 July, one update on the employee record flows through every quote and job. MYOB Acumatica payroll with project accounting does this for services and construction businesses; for trades, a field service app applies the same rates on the job from a phone.