Contractor Rate → Salary
You've been offered a contract rate. This shows roughly what employee salary it is comparable to once unpaid time, expenses, benefits and risk are accounted for.
What do you want to calculate?
See what an hourly or day rate is really equivalent to as an employee salary.
Your details
We don't store your data. Calculations happen in your browser.
Your results
Estimated equivalent salary
$125,000/year
Annual contract revenue
$161,000
Compensation before buffer
$140,000
After removing a 15% contractor buffer
Adjustments
Business expenses $5,000
Employee benefits allowance $10,000
Equivalent employee salary
$125,000
What this means
At $700/day for 5 billable days a week and 46 working weeks per year, you would invoice approximately $161,000 annually. After accounting for your selected business costs, employee benefits and contractor risk buffer, that is roughly comparable to a $125,000 employee salary before tax. This is an estimate based on the assumptions you entered and is not a tax calculation.
Summary of your calculation
- Annual contract revenue
- $161,000
- Business expenses
- $5,000
- Employee benefits allowance
- $10,000
- Contractor buffer
- 15%
- Equivalent employee salary
- $125,000
Why a $700 day rate isn't the same as a $182,000 salary
Multiplying a day rate by 260 working days assumes you bill every single weekday and keep every penny. Contracting doesn't work like that.
Unpaid holidays
Every day off is a day you don't invoice — holidays, sickness and public holidays included.
Business expenses
Insurance, accounting, software, equipment and training come out of your rate.
Contract gaps
Contracts end. Weeks between engagements reduce your real annual income.
Lost benefits
Pension contributions, health cover, paid leave and bonuses have real annual value.
Contractor risk
Short notice periods and no sick pay mean part of your rate is compensation for risk.