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Calculating a Charge-Out Rate

  • Oct 11, 2021

Calculating a Charge-Out Rate

In a recent discussion with a Gold Coast accountant the topic of calculating a charge-out rate came up.

It turns out his company charged him out to the value of $300,000 per annum with an hourly rate of $230 per hour once overheads were taken into account. The more experienced the accountant, the more the charge per hour. Here are some of the considerations when calculating your charge-out rate-:

  Weeks x Hours Total Hours
Total Year

52 x 38

1,976

DEDUCT
Holidays

4 x 38

152

Public Holidays

2 x 38

76

Sick Days

1 x 38

38

Total Hours to Deduct  

266

Balance Available  

1,710

Less Non-Chargeable Tasks

eg 25% of your time

427.50

TOTAL CHARGEABLE HOURS PER ANNUM
 

1,282.50

Hour Rate = Annual Income

Hourly Rate Annual Income
30.00 $ 38,475
40.00 $ 51,300
50.00 $ 64,125
60.00 $ 76,950
70.00 $ 89,775
80.00 $ 102,600
90.00 $ 115,425
100.00 $ 128,250

Factor In Overheads $15,000

Hourly Rate Gross Annual Income Fixed Overheads Net Annual Income
30.00 38,475

15,000

$ 23,475
40.00 51,300

15,000

$ 36,300
50.00 64,125

15,000

$ 49,125
60.00 76,950

15,000

$ 61,950
70.00 89,775

15,000

$ 74,775
80.00 102,600

15,000

$ 87,600
90.00 115,425

15,000

$ 100,425
100.00 128,250

15,000

$ 113,250

Trade Taxable Income

www.traderisk.com.au published the average taxable income by trade (2019). These are the amounts trades people estimate for insurance purposes (income protection).

"The figures have come from over 1,000 tradies from all states and territories, and based on previous years they are incredibly consistent and reliable across the years."

www.traderisk.com.au

Trade Taxable Income

To run a business well it is also important to know -:

This example is an over-simplification, your business overheads may well exceed $15,000. The process of calculating your total chargeable hours is going to be 80% in a best case scenario, we have alowed 75%. However an at a glance look can be a benefit to quickly estimate your own scenario. Including employees also adds complexity to the calculation. If you know your overheads you can work on good 'rule of thumb' quotes.

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