Going out on your own usually means you need to bill a lot more than an employee's salary just to stand still — and the trap that quietly sinks first-year sole traders is pricing near their old hourly rate while the costs eat a fifth of every dollar. Here is the honest money reality. (All figures are indicative and date quickly — your numbers are your numbers.)
Employed vs self-employed — the gap
Qualified tradies cluster above the national median, with a big spread by trade. As a rough, indicative picture (employed): electricians average around $111k, plumbers $86-90k, carpenters $70-80k, construction managers $160-180k. But to match a ~$90-110k wage as a solo operator, you typically need $150-220k of billings — because the wage is what is left after overheads, super and tax. (Builders run higher turnover, $250-500k+, but most of that is materials and subbies passing through the ABN — the number that matters is your contractor profit, not revenue.)
The cost stack — about 20-22% before materials or tax
On around $180k of billings (ex-GST), a lean overhead stack runs to roughly $39k — about a fifth to a quarter of every dollar — before you touch materials or tax:
- Vehicle (ute finance, rego, insurance, fuel, servicing): ~$10-18k
- Tools and replacement: ~$3-6k
- Public liability: ~$500-1,200 (more for high-risk)
- Other insurances (income protection, life/TPD): a few thousand
- Phone, software, admin, accounting, bank and merchant fees: ~$3-6k
- Licences, training, memberships: ~$1-2k
- Super — to match an employee you fund it yourself: roughly 10-15% of your target income (an employer pays 12% SG from 1 July 2025, so to land in the same place you set aside a similar slice).
On top sit materials and subbies (pass-through, big for builders) and downtime — holidays, wet days, quoting, driving and admin are often 20-30% of your hours, unbillable.
The break-even day rate
"Break even" means covering overheads and paying yourself an employee-equivalent wage and funding super and setting aside tax and GST. Work it from billable days, not the hours you are awake: about 46 working weeks × ~4 chargeable days = ~184 billable days a year. To support a ~$100k wage with proper super and cover, a solo tradie needs roughly $180-200k of billings — which works out around $120-125 per billable hour, consistent with the $120-160/hr metro headline rates (plus call-out). The full method is in Setting Your Charge-Out Rate.
The underpricing trap
Here is how good tradies quietly end up on apprentice money: they anchor to their old wage ($45/hr employed → "$85/hr feels fair") without modelling overheads, and they overestimate billable hours (assuming five 8-hour chargeable days versus a real ~4). Run it: $85/hr × 30 billable hours × 46 weeks is about $117k of billings — well below the $180-200k needed. Strip ~$24k of overheads, ~$20-22k of tax and ~$8-10k of super, and the effective take-home lands around $60-65k — apprentice-to-mid-employee territory, but with more risk and no paid leave — while they think they are "on $85 an hour".
Rebuilding the employee safety net
An employed tradie gets workers' comp, default life/TPD in super and 12% SG for free. Self-employed, you self-build it — budget roughly 3-6% of your target income on income protection, life and TPD, plus 1-2% of turnover on public liability and business cover (see Tools & Income Protection Insurance). It is not optional extras — it is the cost of not having an employer.
Common mistakes
- Pricing off your old employee hourly rate instead of your real cost base.
- Counting five 8-hour chargeable days when the reality is ~4 billable days.
- Not funding your own super (the 12% an employer would have paid).
- Forgetting downtime — a fifth to a third of your hours are not billable.
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