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Work out the contract rate that really matches a salary

Divide a salary by 2,080 hours and you get a rate that leaves a contractor worse off than the employee: nobody pays for your holidays, your sick days, the weeks between contracts or the hours spent finding work. Enter the income you want, your days off, the share of time you can bill and the costs an employer used to cover. You get the day rate and the hourly rate to quote.

For example the salary of a comparable job.

Payroll taxes, health cover, pension. Your own figure.

Equipment, software, accountant, insurance.

Vacation, public holidays, sick days.

The rest goes on finding work and admin. Empty means 100.

Rate you need to charge

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Enter the yearly income you want to end up with, before tax.

How the rate is calculated

  • yearly invoices = income × (1 + employer-side costs %) + business costs
  • days worked = 260 − days off (52 weeks of 5 days)
  • billable days = days worked × billable share
  • day rate = yearly invoices ÷ billable days, hourly rate = day rate ÷ hours per day

The comparison with a salaried job divides the same income by 2,080 paid hours (40 hours × 52 weeks). All figures are before income tax and before any sales tax or VAT. The percentages are yours to enter, because employer-side costs differ from country to country.

Questions about the contractor rate calculator

How do I turn a salary into a contractor day rate?

Add the costs an employer would have covered to the salary, then divide by the days you can actually bill. With a target of $100,000, 25% for employer-side costs, $5,000 of business costs, 35 days off and 80% of working days billed, that is $130,000 ÷ 180 days, about $722 a day.

How many billable days are there in a year?

Start from 260 weekdays, subtract public holidays, vacation and sick days, then multiply by the share of time you can bill. 260 minus 35 days off is 225 working days; if 80% of them are billable, that is 180 days.

What extra costs does a contractor pay?

Whatever an employer paid on top of your salary: its share of social security or payroll taxes, health insurance, pension contributions, paid leave, equipment and software. The amounts differ by country, so the calculator asks for your own percentage instead of assuming one.

Is the result before or after tax?

Before tax. It is the amount to invoice. Income tax and any sales tax or VAT depend on where you live and how your business is set up.

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