Contractor Hourly Rate Calculator
Work out your minimum and target contracting rate to cover your income, super, overheads, and leave — plus a 20% margin for gaps and risk.
The target rate includes a 20% margin above the minimum to cover unexpected gaps between contracts, non-billable admin time, and business risk. Your minimum rate is the break-even point — you should aim for the target rate or higher.
How to Set Your Contractor Rate
Setting the right hourly rate is one of the most critical decisions a contractor makes. Too low and you'll struggle to cover your real costs. Too high and you may price yourself out of the market. The key is understanding your true cost base.
What to Include in Your Rate
- Target income: The after-tax income you need to live on
- Superannuation: As a contractor you fund your own super — typically 11.5% of earnings
- Overhead costs: Professional indemnity and public liability insurance, accounting fees, software subscriptions, home office costs, equipment depreciation
- Leave buffer: Unlike employees, contractors don't get paid leave — time off means zero income, so build this into your rate
- Profit margin: A margin of 15–20% provides a buffer for gaps between contracts, slow months, and non-billable time
Billable vs Non-Billable Hours
Not all your working hours will be billable. Allow time for business development, invoicing, meetings, professional development, and administration. Many contractors find only 70–80% of their working hours are actually billable to clients.
Market Rate Check
Once you've calculated your minimum rate, compare it to market rates for your role and industry. Job boards like Seek and specialist recruiters are good sources. If your minimum rate is above the market rate, you need to either reduce costs, increase efficiency, or adjust your income expectations.