Employee to Contractor Rate Calculator
An employee salary divided by working hours is not an equivalent contractor rate. A contractor must replace benefits, fund expenses, cover unbillable time and carry more commercial risk.
- Browser only
- No account
- Editable assumptions
Estimate a sustainable contractor hourly and day rate from an employee package, self-funded benefits, expenses and billable capacity.
Core method
Employee package = salary + bonus + employer retirement + benefits + other employer-paid value.
Required contractor revenue = employee package + self-funded benefits + business expenses, adjusted for the reserve you choose.
Hourly target = required revenue ÷ annual billable hours.
Billable capacity changes the answer
Working weeks should exclude planned leave and realistic downtime. Billable hours should exclude sales, administration, learning and collection. Overstating utilization produces a rate that looks competitive but cannot fund the business.
This is not a classification test
The calculator models a financial target. It cannot decide whether a relationship is legally employment or contracting, calculate jurisdiction-specific tax or replace professional advice.
Common questions
Why is the result higher than my employee hourly pay?
It includes employer-paid value, self-funded costs, unbillable time and the reserve you enter. Those items are not visible in salary divided by hours.
Does this include tax?
No jurisdiction-specific tax is calculated. Use the reserve as a planning input only and seek qualified local advice.