Contractor Wage Calculator: What You Should Actually Be Paying Yourself

Here’s the situation most tradies find themselves in when they go out on their own: they’re charging clients $90 an hour, their calendar is full, and they’re still not sure if they’re actually making money. Worse — they have no idea what to pay themselves.

If you’ve Googled “contractor wage calculator” and ended up here, you’re asking the right question. Working out your contractor wage isn’t just about what’s left over after costs. It’s about running your business like an actual business, not a glorified hobby.

Let’s break it down properly.

Contractor Wage vs Charge-Out Rate: They’re Not the Same Thing

Most tradies confuse these two figures, and that confusion costs them money.

Your charge-out rate is what you bill clients — the hourly or daily rate you quote on jobs. Your contractor wage is what you actually pay yourself from the business after you’ve covered all your costs.

The gap between those two numbers is where your business either survives or struggles. A bloke charging $85/hr but paying himself $80/hr is going broke in slow motion. He just doesn’t know it yet.

A proper contractor wage calculation factors in:

• Business overheads (insurance, tools, vehicle, phone, software)
• Tax obligations (GST, income tax, quarterly BAS)
• Super contributions (you need to fund your own)
• Non-billable time (quoting, admin, travel, chasing invoices)
• Leave and sick days (no employer is paying those for you)
• A profit margin for the business itself

Once you account for all of that, your “wage” — the amount you actually take home — looks very different from your charge-out rate.

The Maths Behind Your Contractor Wage

Let’s run through a real example. Say you’re an electrician, working 48 weeks a year, 40 hours a week. That’s 1,920 hours annually. But not all of those hours are billable. Realistically, after quoting, admin, travel, and downtime, you might be billing 70% of your time — about 1,344 billable hours.

Now let’s say your charge-out rate is $95/hr. Gross annual revenue: $127,680.

Now pull out your actual costs:

• Vehicle (rego, insurance, fuel, maintenance): $12,000
• Public liability + tools insurance: $3,500
• Tools and consumables: $4,000
• Phone, software, accounting: $3,000
• Licences and CPD: $500
• Marketing and leads: $2,000

Total overheads: ~$25,000. That leaves $102,680 before tax.

At that income level, after income tax and Medicare levy, you’re looking at taking home roughly $73,000–$76,000 depending on your deductions. That’s your effective contractor wage — about $38–40/hr in actual take-home.

Not bad. But not $95/hr either. The gap matters.

To get a precise figure for your situation, run your numbers through the Subby to Salary Calculator — it handles the tax, super, and overhead estimates automatically.

What Affects Your Contractor Wage? The Key Variables

The difference between a contractor wage of $50k and $120k often comes down to a handful of variables:

Billable Hours Ratio

This is the one tradies underestimate most. If you’re spending 15 hours a week on non-billable work (quoting, travel, admin, warranty jobs) and you’re only accounting for 5, you’re systematically overstating your effective rate. Track it for a month — you might be surprised.

Overhead Load

Two tradies can charge the same rate and end up with very different take-home wages if one is running a lean operation and the other has excessive tool finance, a ute that costs $1,500/month, and software subscriptions they barely use.

Super Contributions

As a sole trader or contractor, no one is paying super on your behalf. If you’re not putting away at least 11.5% (the current Super Guarantee rate), you’re effectively cutting your future self’s wage. Include it in your contractor wage calculation as a non-negotiable expense.

Leave Provision

Four weeks of annual leave plus ten days of sick leave equals about 6.5 weeks where you’re not earning but still have fixed costs. If you don’t build this into your rate, those weeks will hurt your yearly take-home significantly.

GST Handling

Once you’re registered for GST (mandatory above $75k turnover), 1 in 11 dollars you collect goes to the ATO. Don’t accidentally include it in your wage calculation. Your wage is drawn from ex-GST revenue, not the gross invoice total.

Using the Boss Tradie Contractor Wage Calculator

If you don’t want to run the numbers manually — and honestly, most tradies shouldn’t have to — the Advanced Tradie Calculator is built specifically for Australian contractors.

It accounts for:

• Your state and tax bracket
• Super at the current legislated rate
• Non-billable time as a percentage of your total hours
• Annual overhead budget
• Leave provisions

Punch in your numbers and you’ll get back your actual take-home contractor wage, your required charge-out rate to hit a target income, and a breakdown of where your money goes. It takes five minutes and removes the guesswork.

What Should Your Contractor Wage Actually Be?

There’s no single right answer, but here are some benchmarks worth knowing:

• Electricians: Median contractor earnings $85k–$115k (depending on specialisation and hours)
• Plumbers: $80k–$110k for experienced sole traders in metro areas
• Carpenters/Builders: $75k–$100k for residential, more for commercial fit-out
• Painters: $65k–$90k depending on whether you’re running a crew or solo

If your numbers are coming in significantly below these ranges, it’s usually one of three things: your rate is too low, your billable hours ratio is poor, or your overheads are eating you alive. Fix whichever one is the issue, don’t just work more hours.

Common Mistakes When Calculating Contractor Wages

Mistake 1: Using last year’s turnover without adjusting for growth. If your business has grown, your overheads may have grown with it. Recalculate at least annually.

Mistake 2: Ignoring personal drawings vs business profit. Your wage and your business profit are different things. The wage is what you pay yourself as an operator. The profit is what the business retains. Both matter.

Mistake 3: Not separating business and personal accounts. If your personal spending runs through the business account, you’ll never get an accurate picture of your real contractor wage. Separate accounts from day one.

Mistake 4: Setting it and forgetting it. Your contractor wage should be reviewed every 6 to 12 months. Costs go up. Tax rates change. Your skills and experience command more. Don’t let your wage stagnate while everything else inflates.

The Bottom Line

Most tradies who go into contracting underestimate what they need to charge and overestimate what they’re taking home. The fix isn’t working more — it’s running the numbers honestly and building a rate that actually works for your life.

Your contractor wage should cover your living costs, fund your super, provide for leave, and leave something over for the business to grow. If it’s not doing all four, your rate isn’t high enough.

Start with the numbers. Use the Subby to Salary Calculator to convert your current contracting situation into a comparable salary figure — it’s the fastest way to see if you’re actually ahead of a PAYG role or falling behind. Then use the Advanced Tradie Calculator to dial in your target rate with full overhead and leave provisions built in.

Know your numbers. Charge accordingly. Pay yourself properly.