Salary to Contract Rate Calculator
Thinking of going contract? Dividing your salary by 2,080 hours undercounts badly. This adds back benefits, paid leave and unbilled time.
Equivalent rate
How it’s calculated
The salary is grossed up by the value of benefits, then divided by the working days left after leave, at eight hours a day, times your billable share.
Worked example
A $70,000 salary with 25% in benefits really costs $87,500. After 33 days off and 80% billable time there are about 1,453 billable hours, so the matching contract rate is $60.23 an hour, not the $33.65 you get by dividing by 2,080.
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Questions
Why not just divide salary by 2,080?
2,080 assumes you are paid for every weekday all year. Contractors are not paid for holidays, sick days or time between contracts.
What multiplier do contractors use?
A common rule of thumb is 1.3–1.5× the salary-based hourly rate. This calculator shows the number for your own situation.
Doing these numbers every month? Accounting software can automate invoices, reminders and tax reports.
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