A Tradie's Guide to Calculating Your Hourly Charge-Out Rate

Setting the right hourly rate is the difference between running a profitable business and working for pennies. Many tradies simply copy what competitors charge, but if your costs are different, you could be losing money on every hour billed.

What goes into your rate?

Your charge-out rate needs to cover more than just your wage. It must account for your 'on-costs', which are the hidden expenses required to keep the lights on.

• Insurance premiums and trade licenses
• Vehicle maintenance and fuel costs
• Accounting and software subscription fees
• Tool replacement and repair funds
• Expected profit margin for business growth

1. Determine your total annual business running costs.
2. Add your desired annual salary.
3. Calculate your total billable hours for the year (excluding holidays and admin time).
4. Divide the total costs by your total billable hours to reach your break-even rate.
5. Add your profit margin percentage on top.