Helpful Toolbox

Contractor Rate Calculator

Enter the salary you'd be giving up and see the hourly and day rate that truly replaces it — lost benefits, self-employment tax, unpaid time off, and unbilled hours all included.

📖 How it works & FAQ

Why a contractor rate is far more than your old hourly pay

Divide a $90,000 salary by 2,080 hours and you get about $43 an hour — but quoting that as a contractor is a pay cut in disguise. An employer quietly pays for health insurance, retirement matching, and paid time off, typically worth around 30% on top of salary, plus the employer half of Social Security and Medicare tax. As a contractor, all of that lands on you. You also stop being paid for every hour at your desk: vacations and sick days are unpaid, and only a fraction of your week is billable once proposals, invoicing, and admin take their share. This calculator rebuilds your rate from the ground up so nothing gets lost in the switch.

The formula behind the numbers

Target revenue = salary × (1 + benefits %) × (1 + self-employment tax %). Billable hours = hours per week × (52 − unpaid weeks off) × utilization %. Your recommended hourly rate is target revenue divided by billable hours, and the day rate multiplies that by your billable hours in a day. Every assumption is an editable field, so tune each one to your situation. These figures are estimates only — not professional, financial, tax, or legal advice.

How to use it

  1. Enter the annual salary you want your contract income to replace.
  2. Adjust the benefits uplift — 30% is a typical value for employer-paid benefits, but lower it if your package was lean.
  3. Set the extra self-employment tax; 7.65% represents the employer half of FICA you now pay yourself in the US.
  4. Enter unpaid weeks off per year: vacation, holidays, sick days, and gaps between contracts.
  5. Set your working hours per week and a realistic utilization %, then read your hourly and day rate live.

FAQ

Where does the 30% benefits figure come from?
US Bureau of Labor Statistics data consistently puts employer-paid benefits at roughly 29–31% of compensation. Raise it if you had rich benefits, or lower it if you were mostly cash-compensated.
What should I enter for self-employment tax?
The default 7.65% is the employer half of Social Security & Medicare that shifts to you. Real SE tax interacts with deductions and income caps, so treat it as a ballpark and confirm with an accountant.
What is billable utilization?
The share of working hours a client actually pays for. Most independent contractors land between 60% and 80% once sales, email, and admin are counted — agency-placed contractors can run higher.
Is anything I type uploaded?
No. The math runs entirely in your browser — nothing is sent to a server or stored anywhere.