- Weeks worked
- 46 weeks
- Billable hours a year
- 1,104 hours
- Gross income needed before tax
- $100,000
- Revenue needed including expenses
- $112,000
- Hourly rate, excluding GST
- $101.45
- Same rate including GST
- $116.67
- Eight-hour day rate, excluding GST
- $811.59
The number is usually higher than people expect, and that is the point of the exercise. An employee on $70,000 costs their employer considerably more than $70,000 once leave, ACC, KiwiSaver, equipment and unproductive time are counted. As a sole trader you carry all of that yourself, so your rate has to carry it too.
Where sole traders get this wrong
- Billing every hour worked. Nobody bills 40 hours a week. Quoting, invoicing, chasing payment, travelling, buying materials and doing your tax are all real hours that no client pays for.
- Forgetting unpaid leave. No holiday pay, no sick pay, no public holidays. Every week off is a week with no income.
- Ignoring the gap between busy and quiet. Your rate has to survive the quiet months, not just the good ones.
- Confusing GST-inclusive and exclusive. Quoting “$100 an hour” and later discovering you meant plus GST is a 13% argument with a client you like.
- Copying a competitor's rate. You do not know their costs, their hours, or whether they are making any money.
Then sense-check it
The calculator tells you what you need. The market tells you what is possible. If the two are far apart, something has to give: work more billable hours, cut expenses, raise the value of what you offer, or accept a lower take-home while you build up.
What you should not do is quietly undercharge and hope volume fixes it. It rarely does.
Rates are easier to hold with a real business behind them
A domain and a proper email address cost a few dollars a month and change how quotes are received.