How to work out charge-out rates for your staff in NZ

The true cost of a paid hour

Start with what you pay over a year, not the hourly wage. A full-time employee on 40 hours a week is paid for 52 weeks, which is 2,080 hours, including the weeks they are on leave. On top of the wage, an employer in New Zealand pays:

• KiwiSaver. From 1 April 2026 the compulsory employer contribution is at least 3.5% of gross salary or wages, for members aged 16 to 64. Employer superannuation contribution tax (ESCT) is deducted from that contribution, not paid on top, so the cost to you is the 3.5%.
• ACC levies. The Work levy depends on the classification unit for your industry, and ACC adds the Working Safer levy. Your levy invoice shows your rate. The Earners' levy comes out of the employee's own pay, so it is not your cost.
• Paid time away. At least four weeks' annual holidays, ten days' sick leave a year once someone has been with you six months, and public holidays: eleven national ones plus your regional anniversary day. For someone working Monday to Friday, they normally fall on, or move to, a working day.

Paid leave is already inside the 2,080 hours, so it does not add to the wage bill. What it does is take those hours out of the time someone can work. That is the next step.

Chargeable hours: from 2,080 down to what you bill

Here is the year for a full-time employee, with one assumption you should replace with your own records:

Not every hour at work can be billed. Travel between sites, quoting, picking up materials, rework, training, admin, team meetings and an apprentice's block course are all paid hours that no client pays for. Our article on travel time explains why travel the job requires is work time, so it belongs in this count rather than outside it.

The share that is billed varies a lot by role and business. Guessing it is where most charge-out rates go wrong. Measure it instead: for a month or two, have everyone log their hours against the job they were on, with the non-chargeable work as projects of its own, such as "Travel", "Quoting" and "Admin". Billed hours divided by hours at work is your real chargeable share. The worked examples below use 1,250 billed hours for an apprentice (70% of 1,784), 1,430 for a qualified builder (80%) and 1,070 for a graduate accountant (60%), all illustrative.

Overheads, margin and three worked examples

Two more numbers are yours to set. Overheads are the running costs each person carries: a share of the van or vehicle, tools, insurance, premises, software, phones, training and the owner's time on non-billable work. Divide your yearly overheads by the number of people who bill. Margin is the profit you add on top of cost; these examples use 15%. ACC is shown at a made-up rate of 1% of pay for the building roles and 0.1% for the office role, purely for the arithmetic: use the rate on your own invoice. Every employee is assumed to be in KiwiSaver.

Follow the builder's numbers through. The wage is $38.00 an hour. KiwiSaver and ACC take the employment cost to $82,596.80, which is $39.71 for each of the 2,080 paid hours, $46.30 for each of the 1,784 hours at work, and $57.76 for each of the 1,430 billed hours. Add $25,000 of overheads and the cost is $107,596.80, or $75.24 a billed hour. A 15% markup gives $86.53.

The apprentice in this example is paid the adult minimum wage of $23.95 an hour. An apprentice aged 20 or over whose agreement requires at least 60 credits a year of industry training can be paid the training minimum wage of $19.16, and many are paid more than either; use the real rate. The accountant's salary works the same way as a wage: divide it by 2,080 to compare. The pages on Team timesheets for construction and trades and for professional services show how crews log hours against a job and its tasks, and how practices log hours by client and stage.

Why "two to three times the wage" misleads

A common rule of thumb says to charge two to three times the hourly wage. In the examples, the three rates are 2.58 times the apprentice's pay, 2.28 times the builder's and 3.03 times the accountant's. All sit in the range, and the range is wide enough to hide a loss. The multiple that works depends on overheads and billed hours, not on the wage.

Billed hours matter most. If the builder bills 1,250 hours a year instead of 1,430, the cost per billed hour rises from $75.24 to $86.08. At the same $86.53 rate, the year brings in $108,162.50 against $107,596.80 of cost: $565.70 of profit, instead of $16,141.10 at 1,430 hours. The rate did not change, and nearly all of the profit went. That is why measured hours are worth more than a rule of thumb.

GST goes on top of the charge-out rate, not inside it. A business must register once its turnover reaches $60,000 in 12 months, and then charges 15% on most of what it sells, so $86.53 becomes $99.51. A client registered for GST can generally claim it back; a householder cannot, so say clearly on every quote whether a rate is plus GST or includes it. If you are not registered, do not add GST at all.

Reviewing rates every year

A charge-out rate set once goes stale. Put a date in the calendar each year, after the minimum wage changes and before you price the next season's work, and rerun the sums with:

• New pay rates. The minimum wage is reviewed every year, and the current rates took effect on 1 April 2026. Each $1 an hour on the apprentice's pay adds $2,173.60 a year with KiwiSaver and ACC, which is $1.74 a billed hour, or $2.00 with the markup.
• KiwiSaver at 4% from 1 April 2028. The builder's contribution rises from $2,766.40 to $3,161.60, an extra $395.20 a year, or $0.28 a billed hour ($0.32 with the markup). Small per hour, but it applies to every person.
• Your ACC invoice, which arrives each year with your own levy rate.
• Actual billed hours from the past year, person by person, against the share you assumed.
• Leave rules from 6 August 2028, when the Employment Leave Act 2026 replaces the Holidays Act and changes how leave is worked out; recheck the paid-time-away lines then.

The billed-hours number is the one you can only get from a record of the year. Team timesheets from jobtracker.co.nz shows the hours your people choose to share, by person, project and task, for any period, with budgets in hours that stand out once a job passes 80%. Download the CSV and the chargeable and non-chargeable hours are already split by project, ready for your own rates. It never shows anyone's pay or charge-out rate, does not work out utilisation for you, and does not invoice your clients. It costs $6.99 a seat a month, GST included, for at least three seats.

Billed hours from the record, not a guess