How to Set Your Charge-Out Rate as a Tradie
Your charge-out rate is not your hourly wage — it is your wage plus on-costs (super, leave, insurance, tools and vehicle), plus a share of your business overheads (admin, marketing, software, rent), plus a profit margin, all divided by the hours you can actually bill a client in a year. Add those layers up, divide by realistic billable hours, and you get a rate that keeps the business solvent, instead of one that only just covers today’s fuel and lunch.
Key takeaways
- Charge-out rate is not wage — it also has to cover on-costs, business overheads and profit, not just take-home pay.
- On-costs (super, leave, insurance, tools and vehicle) sit on top of a wage before overheads are even counted.
- Billable hours are always lower than total hours worked — quoting, travel, admin and downtime all eat into what you can invoice.
- Copying a mate’s rate ignores your own on-costs, overheads and billable-hours reality, and can quietly price you into a loss.
- A rates library that stores your true charge-out rate means every quote and tender uses the same considered number, not a fresh guess.
Why your charge-out rate is not your wage
Your charge-out rate is not your wage — it is the hourly figure you bill a client, and it has to carry far more than your take-home pay. If you set it at whatever you pay yourself or your crew per hour, the business quietly absorbs everything else: superannuation, leave, insurance, the vehicle, the software, the shed rent, and whatever should have been left over as profit. The business can look flat-out busy and still go backwards.
A proper charge-out rate is built up from four layers, not one.
- Base wage or drawings — what you or your employees are actually paid per hour
- On-costs — the costs that come with employing someone, including yourself
- A share of business overheads — the fixed costs of running the business whether or not you are on a billable job
- A profit margin — the reason the business exists, not an afterthought
Add on-costs to your base wage
On-costs are the expenses that sit on top of a wage the moment someone is employed — including a sole trader effectively employing themselves. They typically include superannuation, annual leave and leave loading provisions, sick and personal leave provisions, income protection or workers compensation insurance, and the running costs of tools, equipment and a vehicle tied to that person doing the work.
These figures vary by trade, state, award and business structure, so treat any percentage or dollar figure you see quoted — including in this guide — as an illustrative example only, not a rate to copy. Check the relevant modern award, your accountant or a payroll specialist for figures that apply to your business.
- Superannuation guarantee contributions
- Annual leave and leave loading provisions
- Sick and personal leave provisions
- Insurance and workers compensation
- Tools, equipment and vehicle running costs
Spread your business overheads across billable work
Overheads are different from on-costs — they are the fixed costs of running the business itself, and they exist whether or not anyone is on a billable job today. If you don’t build a share of them into your rate, every quote you win is quietly subsidising rent and software out of your own pocket.
Common overhead categories to total up over a year, then spread across your expected billable hours, include the following.
- Admin, bookkeeping and accounting
- Marketing and lead generation
- Software and subscriptions
- Yard, storage or office rent
- Business insurances and licence renewals
- Training, compliance and professional development
Build in a profit margin — it is not leftover money
Profit is the fourth layer, and it should be planned, not hoped for. A margin is a deliberate percentage added on top of your true cost — wage, on-costs and overheads combined — so the business can reinvest, cover quiet periods, and grow, rather than surviving on whatever happens to be left at the end of the year.
Treat your margin as a genuine cost of doing business, not a number you shave off first when a client pushes back on price. If you need to discount, discount from a rate that already has a margin built in — never from your bare costs.
Divide by billable hours, not the hours you clock
The final step is dividing your total annual cost — wage, on-costs, overheads and margin — by the hours you can actually bill a client, not the hours you spend at work. Billable hours are always fewer than total hours worked, because a meaningful chunk of every week goes on work that no client pays for directly.
Typical non-billable time includes the following.
- Quoting and estimating
- Travel between jobs and to suppliers
- Invoicing, admin and compliance paperwork
- Callbacks and warranty work
- Training, toolbox talks and inductions
- Weather delays and equipment downtime
A worked example: building up a charge-out rate
The figures below are an illustrative example only — a way of showing the arithmetic, not a rate to copy. Swap in your own wage, on-costs, overheads and billable hours to get a number that reflects your business.
In this example, adding on-costs, overheads and a margin roughly doubles the base wage before it is even divided by billable hours — which is exactly why charging your wage, or a mate’s rate, so often leaves a gap between what a job looked like it earned and what actually turns up in the bank.
| Cost component | Example annual figure | Running total |
|---|---|---|
| Base wage (example only) | $85,000 | $85,000 |
| + Superannuation (on-cost) | $9,775 | $94,775 |
| + Annual leave and leave loading provision | $6,500 | $101,275 |
| + Sick and personal leave provision | $3,000 | $104,275 |
| + Insurance and workers compensation | $4,500 | $108,775 |
| + Tools, equipment and vehicle costs | $12,000 | $120,775 |
| + Business overheads (admin, marketing, software, rent) | $28,000 | $148,775 |
| + Profit margin (example 20%) | $29,755 | $178,530 |
| ÷ Billable hours (example 1,186 hours a year) | — | ≈ $150 per hour |
The danger of pricing off a mate’s rate
Asking around and pricing at “whatever everyone else charges” skips every one of the steps above. Another tradie’s rate reflects their wage, their on-costs, their overheads, their region and their billable hours — not yours. Copy it and you are effectively adopting their business structure without knowing what it is.
A solo operator running lean from a home office, with no apprentices and an older paid-off ute, can profitably charge less than a business carrying a yard, a fleet vehicle and wages for a crew. Neither rate is wrong — they are just built for different businesses. Borrowing one without doing your own build-up is a quiet way to underprice a job that looks fine on the day and loses money once the real costs land months later.
Reality check
If you can’t explain what your charge-out rate covers — wage, on-costs, overheads and margin — you’re not pricing your business, you’re guessing at someone else’s.
How My Trade Hub bakes your true rate into every quote
Working out your charge-out rate once is only useful if every quote and tender actually uses it. My Trade Hub’s editable rates library lets you store your own labour, material and plant rates — including the charge-out rate you build up using the steps above — so they apply automatically to measured quantities instead of being re-worked from scratch on every job.
Upload a set of plans and My Trade Hub’s automated quantity takeoff measures the items for you; your saved rates are then applied to those quantities to build a bill of quantities and a priced tender. Because the rate-checking step is already done, preparing a priced tender this way is typically 60–75% faster than doing it manually — and every quote is built on the same considered numbers, not whatever rate felt right that morning.
Rates stay fully editable, so when your on-costs, overheads or margin change, you update them once in the library rather than hunting through old quotes. It’s free to create a My Trade Hub account; setting up your rates library and preparing priced tenders sits on the paid Starter, Scale or Professional plans, in AUD, with no lock-in contracts.
Frequently asked questions
What is a charge-out rate?
A charge-out rate is the hourly figure you bill a client for labour. It is built up from your base wage, on-costs like superannuation and leave, a share of business overheads, and a profit margin — then divided by the hours you can actually bill in a year, not the hours you work.
How do I calculate my hourly rate as a tradie?
Add your base wage, your on-costs (super, leave, insurance, tools and vehicle), a share of your business overheads (admin, marketing, software, rent) and a profit margin. Divide that total annual figure by your realistic billable hours for the year to get your charge-out rate.
What are on-costs and why do they matter for pricing?
On-costs are the expenses that come with employing someone — including yourself — on top of their wage, such as superannuation, leave provisions, insurance, and the tools and vehicle tied to their work. Leaving on-costs out of your rate means the wage figure you charge doesn’t actually cover what that person costs the business.
How many billable hours does a tradie actually work in a year?
Fewer than the total hours worked. After accounting for quoting, travel, admin, callbacks, training and downtime, a meaningful share of a working year is non-billable. Building your rate on total hours worked, rather than realistic billable hours, is one of the most common ways tradies underprice their own labour.
Should I charge the same rate as other tradies in my area?
Not automatically. Another tradie’s rate reflects their own wage, on-costs, overheads and billable hours — not yours. Use their rate as a rough market sense-check if you like, but build your own rate from your own numbers so it actually covers your business.
What is the difference between margin and markup?
Margin is profit expressed as a percentage of the selling price; markup is profit expressed as a percentage of cost. The two numbers look similar but are calculated differently, so it is worth confirming which one you are using before you build a profit margin into your charge-out rate.
Does My Trade Hub calculate my charge-out rate for me?
No — you work out your own charge-out rate and enter it into My Trade Hub’s editable rates library. From there, the platform applies it automatically to measured quantities across quotes, bills of quantities and tenders, so every job uses the same considered rate instead of a fresh guess.
Ready to win more work?
Turn your plans into professional tenders 60–75% faster with My Trade Hub. Plans built around your tendering volume — no lock-in contracts.
Get started free