Salary vs. Contractor Rate Calculator
Compare take-home value of a salary job vs. contracting.
Enter your values
ⓘ Live results
- Total salaried compensation value
- $102,000.00
- Extra self-employment tax to cover
- $6,885.00
- Required contractor hourly rate
- $60.49
- Equivalent salaried hourly rate
- $43.27
Quick answer
A contractor typically needs to charge noticeably more per hour than an equivalent salary implies, to cover lost benefits, paid time off, and the employer-side share of payroll taxes.
Equivalent rate = (salary + benefits value + extra SE tax) / billable hours
How to use the Salary vs. Contractor Rate Calculator
- 1Enter your salary and the dollar value of employer benefits (health insurance, 401k match, etc.).
- 2Enter your paid time off and the extra self-employment tax you'd owe as a contractor.
- 3Divide the required total income by realistic billable hours (often 1,500-1,900 for contractors, not 2,080).
Worked example
Using the values the calculator loads with:
Inputs
- Annual salary90000 $
- Employer benefits value (health, 401k match, etc.)12000 $
- Paid time off3 weeks
- Extra self-employment tax (employer share)7.65 %
- Billable hours per year as contractor1800 hours
Results
- Total salaried compensation value$102,000.00
- Extra self-employment tax to cover$6,885.00
- Required contractor hourly rate$60.49
- Equivalent salaried hourly rate$43.27
Frequently asked questions
Why aren't billable hours the same as work hours?
Contractors spend unpaid time on admin, marketing and gaps between contracts, so billable hours are usually well below full-time hours.
What other costs should contractors budget for?
Add costs for your own health insurance, retirement contributions, liability insurance and slower periods between projects.
About this calculator
- Built and reviewed by James Whitfield · How we build and test calculators
- Report an error
Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.