Enter Your Assumptions
Use the fields below to compare a salaried role against a contractor offer with taxes, utilization, leave, benefits, and annual overhead.
Example Data Table
| Scenario | Annual Salary | Bonus % | Benefits % | Contract Rate | Utilization % | Business Expenses |
|---|---|---|---|---|---|---|
| Analyst | $72,000 | 5% | 16% | $52/hr | 82% | $4,200 |
| HR Generalist | $88,000 | 10% | 18% | $65/hr | 85% | $6,500 |
| HR Program Lead | $115,000 | 12% | 20% | $88/hr | 87% | $9,400 |
Formula Used
Salary Side
Salary Gross Cash = Annual Salary + (Annual Salary × Bonus %)
Salary Net Cash = Salary Gross Cash − (Salary Gross Cash × Salary Tax %)
Benefits Value = Annual Salary × Employer Benefits %
Salary Total Compensation = Salary Gross Cash + Benefits Value
Contract Side
Base Hours = Contract Hours per Week × Contract Weeks per Year
Utilized Hours = Base Hours × Utilization %
Billable Hours = Utilized Hours − (Unpaid Days × Daily Hours)
Contract Gross Revenue = Billable Hours × Hourly Rate
Contract Net = Gross Revenue − Taxes − Benefits Cost − Business Expenses
Break-Even Rate
Required Gross = (Target Outcome + Business Expenses) ÷ (1 − Contract Tax % − Contract Benefits %)
Break-Even Hourly Rate = Required Gross ÷ Billable Hours
How to Use This Calculator
- Enter the salaried role details, including base pay, bonus, benefits, taxes, and working hours.
- Enter contractor assumptions, including hourly rate, weekly hours, utilization, unpaid time, taxes, and business expenses.
- Submit the form to view salary net cash, salary total compensation, contractor net income, and break-even contract rates.
- Review the chart and export the results in CSV or PDF format for offer discussions or internal planning.
Frequently Asked Questions
1. What does this calculator compare?
It compares salary cash, salary total compensation, and contractor net income. It also estimates hourly value, billable hours, and contract rates needed to match salary outcomes.
2. Why include utilization percentage?
Contractors rarely bill every available hour. Utilization adjusts for sales time, admin work, gaps between projects, and other non-billable periods.
3. Why are business expenses separated?
Contractors often pay for software, equipment, insurance, accounting, marketing, and workspace. Keeping these costs separate makes the comparison more realistic.
4. Does salary total compensation mean take-home pay?
No. Total compensation includes employer-paid benefits value. It helps you compare the full package, not only cash received after taxes.
5. Can I use blended tax rates?
Yes. This tool uses simplified percentage inputs. Enter your best blended estimate for income taxes, payroll taxes, or self-employment taxes.
6. How is break-even rate calculated?
The calculator finds the hourly contract rate required to match either salary net cash or salary total compensation after contractor taxes, benefits, and expenses.
7. Should paid leave matter in the decision?
Yes. Salary roles often include paid holidays and leave. Contractors usually fund time off themselves, which affects the true effective hourly value.
8. Is this tool suitable for negotiations?
Yes. It helps frame trade-offs using measurable assumptions. Still, final decisions should also consider stability, flexibility, growth, and risk tolerance.