New Zealand calculator
Contractor Hourly Rate Calculator NZ
Estimate the hourly charge-out rate your contracting business may need to support a chosen pre-tax owner income, business overheads and realistic billable time.
Last reviewed by NZ Calculator:
How do I calculate my contractor hourly rate in NZ?
Add the annual income you want to earn to your business overheads, allow for a profit or contingency buffer, then divide that annual revenue target by realistic billable hours — not every hour you expect to work.
Your contracting target
Your rate estimate
This is a business-pricing estimate, not tax, employment-status or accounting advice.
How to calculate a contractor hourly rate
Rate = required annual revenue ÷ realistic annual billable hours.
Required annual revenue in this calculator starts with your desired pre-tax owner income plus business overheads, then adds the selected contingency or profit buffer. Billable hours should be lower than total working hours because contractors also spend time on administration, quoting, marketing, training and gaps between jobs.
Contractor vs employee rate
Do not simply divide an employee salary by 2,080 hours and call that a contractor rate. Business.govt.nz notes contractors need to plan for gaps between contracts and cover their own tax, ACC and other costs, while setting the right price and hourly rate is a core contracting task.
GST and schedular payments
Inland Revenue says some contractor payments are schedular payments and contractors may need to notify the payer of a tax rate. It also states GST registration can be required when earnings meet the registration rules. This tool deliberately keeps tax outside the hourly-rate formula.
NZ sources: Business.govt.nz — before you start contracting · Inland Revenue — schedular payments for contractors.
Frequently asked questions
How do I work out my contractor hourly rate in NZ?
Start with the annual income you want before personal tax, add annual business overheads, allow for non-billable weeks and hours, add any profit or contingency buffer, then divide required annual revenue by realistic billable hours.
Why should a contractor rate be higher than an employee hourly wage?
A contractor normally needs to fund business overheads and time that employees may be paid for, such as leave, public holidays, administration, gaps between contracts and business development. Tax and ACC responsibilities also differ.
Does this calculator include income tax?
No. Desired owner income is entered before personal income tax. Contractor tax treatment varies, including schedular payments in some situations.
Should I include GST in my contractor hourly rate?
If you are GST-registered, you normally quote an amount excluding GST and add GST to taxable supplies. Inland Revenue says GST registration is required in certain circumstances, including when taxable turnover reaches the threshold.
How many billable weeks should a contractor use?
Use a realistic number after allowing for holidays, public holidays, sickness, administration, marketing, training and gaps between contracts. The calculator lets you choose the working weeks and billable hours directly.
What business expenses should I include?
Include costs needed to earn the revenue: software, insurance, accounting, equipment, licences, travel or vehicle costs, workspace and other overheads relevant to your contracting business.
What is a contingency or profit buffer?
It is an optional percentage added above required owner income and overheads to allow for uncertainty, reinvestment or profit. It is not a tax calculation.
Is this a contractor tax calculator?
No. It is a charge-out-rate planner. Use Inland Revenue guidance for schedular payments, GST and your actual tax obligations.