Before you can work out what to charge, you need to know the rate you can never go below: your break-even. It is the hourly figure that just covers your costs — wages, overheads, the lot — with zero profit. Charge under it and every hour on the tools sends you backwards. Here is how to find it.
Step 1 — Add up your annual costs
Everything it costs to run you and the business for a year, whether or not you are on a job:
- Your wage / drawings — what you actually need to pay yourself to live.
- Overheads — insurance, phone, software, registrations, accounting, advertising.
- Vehicle — fuel, rego, servicing, insurance, repayments.
- Tools & consumables — replacement, repairs, the bits that never get billed.
- Super — pay yourself super too; it is a real cost.
Step 2 — Work out your real billable hours
This is the step that shocks most tradies. You do not bill 40 hours a week. Quoting, travel, buying materials, admin, invoicing and chasing money are all unpaid. A full-time tradie often bills only 25–30 hours a week once all that is stripped out.
Step 3 — Divide
Free True Hourly Rate Calculator
Enter your costs and honest billable hours and it works out your break-even instantly — then shows the charge-out rate you need once profit is added on top.
Open the free toolFrom break-even to charge-out
Break-even keeps you alive; it does not get you ahead. Your actual charge-out rate is break-even plus a profit margin — the bit that lets you save for a slow month, upgrade gear and grow. Never quote at break-even; quote above it, deliberately.
Frequently asked questions
It is the hourly rate you must charge just to cover all your costs — wages, overheads and non-billable time — with zero profit. It is the floor below which every hour you work actually loses you money. Your real charge-out rate should always sit comfortably above it.
Add up your total annual costs (your wage/drawings, overheads, tools, vehicle, insurance, super), then divide by your actual billable hours in a year — not the hours you work, only the ones you can invoice. The result is your break-even hourly rate.
Break-even is what you need just to not lose money. Your charge-out rate is break-even plus a profit margin. If you charge at break-even you survive but never get ahead; the margin on top is what lets you save, invest and grow.
Because quoting, travel, admin, invoicing, chasing payments, buying materials and downtime are all unpaid. A tradie working 40 hours a week often bills only 25–30 of them. Dividing costs by real billable hours — not total hours — is what makes the break-even number honest.
Stop guessing your floor
Admin Substitute keeps your real costs and rates in one place and builds them into every quote — so you never accidentally price a job below what it costs you to do it.
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