What should you actually charge?
Not your old salary divided by 2,080. Income, overheads, ACC, unpaid leave and the hours you can realistically bill go in; the rate you must charge, the day rate and the GST-inclusive figure come out — with every deduction shown as a line you can change.
Assumption Your working year is 47 weeks = 1,880 hrs, set by the two fields above — not the 2,080 hours a salary is divided by. Change either field and every figure below moves.
Exact break-even $95.94 — rounded up to the next $5, because nobody quotes $95.94.
SOURCE·Arithmetic only — no external rate·REVIEWED JUL 2026
GST registered? The invoice line is $115.00 per hour ($100 + 15% GST). Quote businesses the ex-GST figure; quote consumers the inclusive one.
Next step Price a job at this hourly rate → The rate that covers your year, applied to real hours.Count the billable hours this rate has to be charged against →
Why the salary ÷ 2,080 rate is the wrong number
The instinctive way to set a contract rate is to take the salary you used to earn and divide by 2,080 — fifty-two 40-hour weeks. $90,000 becomes $43.27 an hour, you add a bit, quote $55, and feel expensive.
Eighteen months later you are exhausted and somehow earning less than you did employed. The arithmetic explains it, and none of it is subtle. You do not work 2,080 hours: take off 5 weeks of leave, statutory holidays and sick days and you are at 1,880 working hours. You do not bill those either — quoting, invoicing, travel, admin and empty weeks take their share, so at a realistic 60% billable you have about 1,128 hours a year that earn anything. Meanwhile the costs an employer used to absorb — ACC, insurance, software, tools, your accountant — are now yours, and a business that makes no margin at all cannot absorb a single bad quarter.
Spread $108,222 across 1,128 hours and the floor is $100 an hour — 2.3× the shortcut figure. That is not a markup and it is not confidence. It is the same income, once the year is counted honestly.
Which is why every one of those deductions is a field you can see and change above, rather than a constant buried in the code. A rate you cannot explain line by line is a rate you cannot defend when a client pushes back on it.
What your rate actually has to cover
- Count the year you actually work. 40 hours a week over 47 weeks — 52 less the 5 weeks of leave, public holidays and sick days nobody pays you for — is 1,880 hours, not 2,080.
- Take out the hours you cannot bill. At 60% billable, quoting, invoicing, travel, admin and empty weeks take the rest. That leaves 1,128 billable hours.
- Add every cost the employer used to absorb. $90,000 of income, $6,000 of overheads and $1,400 of ACC and insurance is a cost base of $97,400.
- Add the margin the business is meant to make. 10% on top of the cost base — profit is what pays for a bad quarter, a new laptop and eventually a holiday. Revenue needed: $108,222.
- Divide by billable hours, then round up. $108,222 ÷ 1,128 hours = $95.94, rounded to $100. Treat it as your floor — competitive positioning goes on top of it, never below.
working hours = hours per week x (52 - weeks off)
= 40 x 47 = 1,880 h
billable hours = working hours x billable %
= 1,880 x 60% = 1,128 h
revenue needed = (income + overheads + ACC) / (1 - profit %)
= (90,000 + 6,000 + 1,400) / 0.90
= 108,222
hourly rate = revenue needed / billable hours
= 108,222 / 1,128 = 95.94/h
--- the shortcut this tool rejects -------------------------
naive rate = salary / 2,080 h <- 2,080 is an ASSUMPTION
= 90,000 / 2,080 = 43.27/h
shortfall = 100.00 - 43.27 = 56.73/h
The same year at every billable ratio
One number decides more of your rate than any other: the share of your working hours a client actually pays for. Same 1,880-hour year, same $108,222 of revenue needed — only the billable share changes.
| Billable share | Billable hrs / yr | Rate you must charge | vs salary ÷ 2,080 |
|---|---|---|---|
| 40% | 752 | $143.91 | ×3.33 |
| 50% | 940 | $115.13 | ×2.66 |
| 60% | 1,128 | $95.94 | ×2.22 |
| 70% | 1,316 | $82.24 | ×1.90 |
| 80% | 1,504 | $71.96 | ×1.66 |
| 90% | 1,692 | $63.96 | ×1.48 |
| 100% | 1,880 | $57.57 | ×1.33 |
SOURCE·Arithmetic only — no external rate·figures derived from your own inputs·REVIEWED JUL 2026
Rate questions, answered
How do I work out my hourly rate as a contractor?
Why can't I just match my old salary's hourly equivalent?
What percentage of my hours are billable?
Where does the 2,080 hours figure come from, and should I use it?
Should I quote my rate including or excluding GST?
How does ACC affect my rate?
Is this calculator free and private?
Where these figures come from
Every number this tool uses, with the official source and the date it applies from. If a figure here is out of date, the source link is the one to trust.
- New Zealand GST rate — 15%
- Four weeks' paid annual holidays; 8% holiday pay in place of annual holidays (Holidays Act 2003)
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These tools are free and always will be. Built by Amit Sharma — an Auckland real-estate agent and marketer followed by 214K across YouTube, Facebook, Instagram and TikTok.
