Charge Out Rate Calculator

MPAQ with Xact Accounting have compiled the Calculating Charge out Rates Guide for your plumbing business to show you how to calculate charge out rates that assist with growth and profitability of your plumbing business. This guide was updated in September 2025 to provide more information as price rises continue to affect products and materials.

This guide is designed for industry to help you understand your real costs and set sustainable, competitive charge-out rates. Many businesses go under because they are charging less than what is required to cover the costs of their business and a wage for themselves and/or their employees.

Many operators do not fully understand the difference between a margin and mark-up. This can lead to minimal business profits and universally overheads not being covered. Plumbing and gas businesses sell two main items: labour and materials. Both take time and money to manage, and both need to be marked up to cover their true cost and to allow for a profit margin. The management of materials requires trade accounts, timely payments to suppliers, time taken to source, specify, store, transport, and return unused items, etc. There is also your administration time to reconcile dockets and accounts, as well as other general business expenses to operate (overheads).

Watch the video below for a breakdown of how to use the calculator and guide.

✅ What you will get from this Charge Out Rate Calculator and Guide✅

1. What are Your True Costs?

• Many businesses undercharge by not including all overheads and inefficiencies.

• Know the true cost of employing staff (beyond just hourly wages), lost days (public holidays, sick days, RDOs, downtime), employee overheads (superannuation, WorkCover, potential payroll tax), and efficiency losses (travel, downtime, site movement, etc.).

2. Financial Sustainability

• Supports the creation of sustainable charge-out rates, ensuring long-term business viability.
• Encourages informed decisions rather than guesswork or matching competitors blindly.

3. Improve Industry Competitiveness

• Offers a benchmarking opportunity—see if you're in line with others in the industry.
• Helps businesses remain competitive while still maintaining profitability.

4. Strategic Hiring and Pricing

• As labour costs rise, updating charge-out rates ensures new hires don’t reduce margins.
• Recommends annual or semi-annual reviews of rates to reflect changing costs and market conditions.

Download the Guide to Calculating Charge Out Rates

Price increase can be a delicate matter to break to your clients, but this is essential and should be communicated clearly. MPAQ has prepared a draft templated letter that you can use to advise your customers of your price increase.

DOWNLOAD THE TEMPLATE LETTER HERE

Please contact MPAQ on 07 3273 0800 or at info@mpaq.com.au if you have any questions. You can also contact Xact Accounting for specific accounting advice on 07 3124 8680.

Instructions for downloading the Charge Out Rate Calculator

1. Enter your details below to download the calculator
2. On the Employee Costs worksheet, fill in your employee costs to work out the chargeable rate for an employee based on their actual working hours and how many of these hours you can actually charge to a customer
3. Optional - Work out your overhead costs (or enter your overhead % if you already know this amount) on the Business Expenses Worksheet
4. Enter your desired gross profit margin, which will give you the required charge out rate to cover your business expenses and maintain your desired profit margin
5. Optional - Use the Material Mark-up worksheet to help you work out a margin to apply to materials that you on-charge to customers    

Disclaimer

This calculator is intended as an industry guide only and should be adapted according to individual circumstances. We recommend that you consider your actual business needs and obtain independent, formal advice according to your individual business circumstances.

Created in collaboration with