Choose a conversion direction
Use economic assumptions you can defend rather than a fixed multiplier.
Salary conversion guide
Contractor rate vs salary calculator
A $100,000 salary is not simply $48.08 per hour when you become independent. Convert salary to a contractor rate using benefits, overhead, and realistic billable capacity—or run the math in reverse.
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Tutorial
Why salary ÷ 2,080 is usually too low for contract pricing
Dividing annual salary by 2,080 assumes 40 paid hours for all 52 weeks. That is useful for finding a simple employee hourly wage, but an independent professional often has fewer invoiceable hours and additional costs.
1. Start with the salary you are trying to replace
If you would otherwise accept a $120,000 employee role, that salary is the first economic target—not the final contractor revenue target.
2. Put a value on benefits
Health insurance, retirement matching, employer-paid premiums, paid leave, training, equipment, and other benefits have value. The percentage field is a shortcut; use a percentage that reflects the compensation package you are comparing.
3. Add business overhead
Software, insurance, bookkeeping, equipment, marketing, legal services, licensing, continuing education, and workspace costs may now come out of contractor revenue.
4. Use billable hours, not working hours
A 40-hour workweek does not necessarily produce 40 client-billable hours. Sales, proposals, invoicing, administrative tasks, gaps between engagements, and professional development consume capacity.
5. Decide whether you need a pricing cushion
The minimum rate is mathematical. The target rate adds your selected cushion for uncertainty and negotiation. Neither number knows what the market will pay.
Worked example
What contractor rate replaces a $120,000 salary?
Try $120,000 salary, a 20% benefits allowance, $10,000 annual overhead, 48 working weeks, 25 billable hours per week, and a 10% pricing cushion. Compare the resulting contractor target with the simple $120,000 ÷ 2,080 calculation. The gap illustrates why utilization and business costs matter.
Using the reverse conversion
If a recruiter quotes an hourly contract rate, switch to Rate → salary. The calculator annualizes the rate at your selected billable capacity, subtracts overhead, and backs out the benefits allowance. It is a benchmark—not a promise that the two arrangements are economically or legally equivalent.
Is a 2× salary-hourly multiplier always appropriate?
No. Fixed multipliers hide the assumptions that matter most. A specialized contractor with low overhead and guaranteed utilization may need a smaller premium; someone with significant downtime, benefits costs, and risk may need more.
Does this include income taxes?
No. This page focuses on compensation economics. Use your own tax planning separately and consult a qualified professional for tax advice.