Chip
Chippie's AI assistant
G'day, I'm Chip, Chippie's AI assistant. Ask me anything about Chippie.
Quick answer
To calculate a tradie charge-out rate: decide the take-home pay you want, add the real costs of running the business (super, insurance, vehicle, tools), divide by your genuine billable hours (1,400 to 1,800 a year, not 1,976), then add profit and GST. Most tradies skip the billable-hours step and undercharge.
To calculate your charge-out rate: decide the take-home pay you want, add the real costs of running the business (super, insurance, vehicle, tools), divide by your genuine billable hours (1,400 to 1,800 a year, not 1,976), then add profit and GST. Most tradies skip the billable-hours step and undercharge every job.
Your charge-out rate is the price of an hour of your business, not the price of an hour of you. That distinction is where most rates go wrong. When you were on wages, an hour paid your wage. Now an hour has to pay your wage plus your super, your insurances, the ute, the tools, the fuel, the accountant, the rego, and the hours nobody pays for: quoting, invoicing, driving, chasing money.
A rate copied from what the bloke down the road charges tells you about his costs, not yours. The only rate that means anything is one built up from your own numbers, and it takes about twenty minutes with a beer and a calculator. Four steps, worked through below.
Work backwards from the life you want, not forwards from what feels chargeable. Pick the annual take-home you are aiming for. If you would have earned $90,000 on wages doing this work for someone else, that is a sensible floor; you did not take on the risk and the admin of your own ABN to earn less than an employee.
Write the number down. Every other step builds on it, and being vague here is why so many tradies discover at tax time that they paid themselves less than their apprentice. This is the wage component only; the business costs and the profit come next, on top.
Now stack the on-costs, the money the business spends before you see a cent. The list for a typical solo tradie:
A common rule of thumb is that on-costs add 20 to 30 percent on top of the wage, but tally your own; a tradie with a new ute and heavy gear sits well above that. On $90,000 of wages, a 25% loading means the business must recover about $112,500 before profit. That bigger number is what your billable hours have to carry.
Divide by the hours clients actually pay for, not the hours you work. A 38-hour week times 52 weeks is 1,976 hours, and it is a fantasy. Take out four weeks of leave, public holidays, sick days, and the daily unpaid grind of quoting, invoicing, driving between jobs and picking up materials, and most solo tradies genuinely bill somewhere between 1,400 and 1,800 hours a year.
The difference is not academic. Say your Step 2 number is $90,000 to recover (using take-home only, to keep the example clean):
Illustrative numbers, but the shape is real: divide by the fantasy figure and you underprice every hour you ever sell, and the gap compounds silently all year.
The rate so far only breaks even, and a business that breaks even is a job with extra paperwork. Add a profit margin on top, commonly 10 to 20 percent, and it is not greed. Profit is what buys the next ute, covers the quiet fortnight in winter, and pays you back for carrying the risk.
Then GST: if you are registered, decide whether the rate you quote is GST-inclusive or exclusive and say so on every quote. A $75/hr rate that turns out to mean $82.50 at invoice time is how disputes start. Business-to-business, ex-GST is normal; for homeowners, quote the inclusive figure they will actually pay.
A charge-out rate only earns its keep if every quote actually uses it, and that is a workflow problem more than a maths problem. The failure mode: you do this exercise once, then three months later you are back to plucking round numbers standing in someone's kitchen, because the real rate lives in a note you cannot find.
Put the rate where quoting happens. In Chippie you can save your labour rate as a line item once, and it drops into every quote and invoice at the right number. Chippie does not calculate the rate for you; the twenty minutes with the calculator is yours. It just makes sure the number you calculated is the number you charge. For everything around the rate (markup vs margin, itemising, what a quote must include), see how to quote a job.
How much should a tradie charge per hour in Australia? There is no universal number; it depends on your trade, costs and region. What matters is that your rate covers your wage, on-costs and profit across your real billable hours. Build it from your own figures rather than copying a mate's.
What are billable hours for a tradie? The hours a client actually pays for. After leave, public holidays, sick days, quoting, invoicing and driving, most solo tradies bill 1,400 to 1,800 hours a year, well short of the 1,976 a 38-hour week suggests.
Should my charge-out rate include GST? If you are GST-registered, decide and state it. Ex-GST rates are normal between businesses; homeowners should see the GST-inclusive price they will really pay. Never leave it ambiguous on a quote.
How much profit should a tradie build into their rate? Commonly 10 to 20 percent on top of full cost recovery. Profit funds equipment replacement, slow periods and business risk. A rate without profit means the business only ever breaks even.
Do I include super in my charge-out rate? Yes. As your own boss nobody pays super for you, so build it in as an on-cost (the guarantee rate for employees is 12% from 1 July 2025, a sensible benchmark for yourself).
Do the maths once, then let the number do the work. Chippie's free tier lets you save your rate as a line item so every quote goes out at the price you actually calculated.
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G'day, I'm Chip, Chippie's AI assistant. Ask me anything about Chippie.