This calculator helps freelancers and contractors in New Zealand determine a profitable charge-out rate. A well-calculated charge-out rate ensures you cover all your business expenses, pay yourself a fair salary, and make a profit, all while remaining competitive in the market.
Understanding Your Charge Out Rate
Setting the right charge-out rate is crucial for the sustainability and growth of your freelance or contracting business. It's not just about how much you *want* to earn, but about covering all your costs and building a successful enterprise.
Key Components of Your Rate:
Your Desired Salary: This is the amount you want to take home as your personal income after taxes and other deductions.
Annual Business Overheads: These are all the costs associated with running your business that are not directly tied to a specific project. This includes things like office rent, software subscriptions, insurance, professional development, marketing, and even a portion of your home office expenses.
Billable Hours: This is the number of hours you realistically expect to spend working directly on client projects each week. It's important to be realistic and not overestimate, as non-billable tasks (admin, sales, training) will take up a significant portion of your time.
Weeks Worked Per Year: Account for holidays, sick leave, and potential downtime between projects.
Superannuation: New Zealand's KiwiSaver scheme and other superannuation funds are essential for long-term financial security. Your rate needs to account for your contributions.
Profit Margin: This is the amount of money left over after all expenses and salary are paid. Profit allows your business to reinvest, handle unexpected costs, and grow.
By inputting these figures into the calculator, you get a robust starting point for your hourly rate. Remember to also research market rates for your services in New Zealand to ensure your calculated rate is competitive. You may need to adjust based on your experience, the demand for your skills, and the value you provide to clients.
function calculateChargeOutRate() {
var annualSalaryTarget = parseFloat(document.getElementById("annualSalaryTarget").value);
var annualOverheads = parseFloat(document.getElementById("annualOverheads").value);
var billableHoursPerWeek = parseFloat(document.getElementById("billableHoursPerWeek").value);
var weeksWorkedPerYear = parseFloat(document.getElementById("weeksWorkedPerYear").value);
var superannuationContributionRate = parseFloat(document.getElementById("superannuationContributionRate").value);
var profitMargin = parseFloat(document.getElementById("profitMargin").value);
var resultElement = document.getElementById("calculator-result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(annualSalaryTarget) || isNaN(annualOverheads) || isNaN(billableHoursPerWeek) || isNaN(weeksWorkedPerYear) || isNaN(superannuationContributionRate) || isNaN(profitMargin)) {
resultElement.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (billableHoursPerWeek <= 0 || weeksWorkedPerYear = 1) {
resultElement.innerHTML = "Profit margin must be less than 100%.";
return;
}
var chargeOutRatePerHour = totalCostToCover / (totalBillableHoursPerYear * (1 – profitMargin));
// Calculate required annual revenue
var requiredAnnualRevenue = chargeOutRatePerHour * totalBillableHoursPerYear;
// Calculate profit
var actualProfit = requiredAnnualRevenue – totalCostToCover;
var calculatedProfitMargin = (actualProfit / requiredAnnualRevenue);
resultElement.innerHTML = "