Work and pay guide
Hourly Rate Guide
An hourly rate must recover non-billable time, leave, super, tax administration, insurance, equipment and profit—not just mimic an employee wage.
Updated 16 October 2026 • Reviewed by Tools by Layna Editorial Team • General information only
The straight answer
An hourly rate must recover non-billable time, leave, super, tax administration, insurance, equipment and profit—not just mimic an employee wage.
What matters most
| Priority | How to apply it |
|---|---|
| Main driver | Separate billable hours from total working hours. |
| Downside risk | Include GST correctly if registered. |
| Verification point | Review rates when costs or utilisation change. |
How to use this guide
Build the rate from billable hours after allowing for unpaid administration, leave, super, insurance, equipment, software, tax administration and profit. For this page, the comparison is only valid when the monetary basis and timing are consistent.
- Before calculating hourly rate guide, write down the exact decision the comparison must answer.
- Validate the base case against this page-specific point: Separate billable hours from total working hours.
- Build a realistic downside scenario around this constraint: Include GST correctly if registered.
- Before acting, verify this final check against current statements, contracts or official guidance: Review rates when costs or utilisation change.
Worked example
A contractor working 40 hours may bill only 25 after quoting, admin and travel, so dividing the income target by 40 understates the required rate.
What can change the answer
- For hourly rate guide, confirm whether every amount is gross or net and whether GST is included, excluded or not applicable.
- Separate fixed costs, variable costs, one-off costs, interest and fees instead of hiding them inside one total.
- Use actual payment dates and matching weekly, monthly or annual periods so timing does not distort the comparison.
- Stress-test the result against the risk highlighted on this page: Include GST correctly if registered.
Common mistakes
- Treating hourly rate guide as settled after one calculation or one short observation.
- Ignoring the page’s main limitation: Include GST correctly if registered.
- Changing course before checking this review signal: Review rates when costs or utilisation change.
- Choosing the most attractive headline figure while ignoring cash flow, fees, timing or the cost of being wrong.
Sources and method notes
- business.gov.au: choosing a pricing strategy — Hourly pricing, business costs, leave and overhead.
- ATO: registering for GST — GST registration and reporting obligations where applicable.
Related calculators and guides
Frequently asked questions
Should I divide my income target by all the hours I work?
Use realistic billable hours. Quoting, administration, travel, leave and gaps between jobs can reduce the hours that customers pay for; dividing by total working hours can understate the rate.
Is my quoted hourly rate the same as take-home pay?
No. Business costs and any applicable GST, tax and other obligations still need to be allowed for. A sustainable quote must also recover non-billable work and overhead.
Bottom line
An hourly rate must recover non-billable time, leave, super, tax administration, insurance, equipment and profit—not just mimic an employee wage. Use hourly rate guide to compare scenarios and expose the assumption doing the most work. Verify current rates, fees, GST treatment and contract terms before committing.
Choose the right hourly-rate calculation
Employee salary conversion and sole-trader pricing answer different questions, so use the calculator that matches the decision.