Work out an honest hourly charge-out rate from cost, overheads, and target margin. Built for NZ trade businesses.
This tool works backwards from what you need to earn to what you have to charge per hour. Enter the income you want, your overheads, the weeks you work and the hours you can actually bill, and it returns a break-even rate and a rate with margin on top.
Billable hours are the weeks you work, times the hours you can bill in a day, times five. Both of those inputs default low on purpose, and they are the numbers most worth arguing with before you trust the answer.
The hours field defaults to 7, not 8. The difference is travel between jobs, quoting in the evening, the run to the merchant, cleaning up, and the half hour talking to a client that never lands on a timesheet. Charging as though every hour on site is billable is the single most common way a rate comes out too low.
The weeks field defaults to 44, not 52. That is annual leave, statutory holidays, sick days and the weeks the weather takes off you. Divide a year's income by 52 and you have priced yourself as though you never stop.
Push those two numbers up to be optimistic and the rate falls; the money you needed does not.
Break-even is your income plus your overheads, divided by billable hours. That is the rate at which you make nothing — it is the floor, not a price.
The recommended rate divides the break-even by one minus your target margin, which is the same margin arithmetic the markup vs margin tool uses. It is a margin, not a markup, so a 15% target means 15% of what you invoice rather than 15% on top of your cost.
The annual revenue figure is a sense check: it is what you would turn over if every billable hour got sold at that rate. If it looks unreachable for your market, the inputs need revisiting rather than the output.
A charge-out rate is only as honest as the hours and overheads you feed it. Check both against your last full year rather than an estimate, and confirm the result with your accountant before you reprice.