What does an employee really cost you per hour?

The calculator adds up the total yearly cost of the employee, including wages, paid leave, KiwiSaver, ACC, software associated with the employee, and other costs specific to the business. It then divides that by the hours they actually work, after leave, to give the true cost per hour. The suggested charge-out rate is based on the hours that can be billed, plus your margin for overheads and profit.

The charge-out rate has to cover far more than just the wage. Paid leave, KiwiSaver, ACC, other employee related costs and your business overheads all contribute to whether your business makes a profit.

It’s on your annual ACC invoice, or in MyACC for Business. Add the work levy and the Working Safer levy together, and enter the total per $100 of earnings. ACC levy rates vary and are specific to the industry you work in.

There is no official figure, most small businesses fall somewhere between 75% and 85%. Factors such as travelling, quoting, training, admin tasks, and paid rest breaks need to be considered but depend on the type of business.