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 June 2023 to provide more information as price rises continue to affect products and materials.
This guide is designed for industry to help you understand how you can ensure your business is a profitable one. 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).
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.
Please contact MPAQ on 07 3273 0800 or at firstname.lastname@example.org if you have any questions. You can also contact Xact Accounting for specific accounting advice on 07 3124 8680.
- Enter your details below to download the calculator
- 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
- Optional - Work out your overhead costs (or enter your overhead % if you already know this amount) on the Business Expenses Worksheet
- 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
- Optional - Use the Material Mark-up worksheet to help you work out a margin to apply to materials that you on-charge to customers
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.