Employee vs. Contractor Cost Calculator
Compare annual employer costs and contractor invoices with adjustable workload, benefits and overhead assumptions.
Enter your assumptions
Costs are not directly comparable if the two options deliver different hours, output, supervision, or responsibilities. This is not a worker-classification test.
Calculations run in your browser. Values are estimates, not guarantees.
How to compare hiring costs
A salary is only one part of an employee's cost. Employers may also pay taxes, benefits, equipment and overhead. Contractors generally invoice for work, but may require onboarding, management, tools or other expenses.
Calculation method
Employee cost = annual salary × (1 + employer benefits and taxes percentage) + annual overhead. Contractor cost = hourly rate × hours per week × working weeks + other annual contractor costs. The break-even hourly rate is (employee cost − other contractor costs) ÷ contractor hours for the year, when those hours are positive.
Worked example
A $65,000 salary with a 25% employer burden and $2,500 overhead totals $83,750 annually. A contractor charging $55 for 30 hours per week over 48 weeks costs $79,200 before any other contractor expenses. The $4,550 difference is a cost comparison only, not a recommendation to hire one way or another.
What this estimate cannot decide
Employment classification is governed by applicable law and facts of the working relationship, not just the contract label or relative cost. This calculator excludes overtime rules, paid leave details, termination costs, output quality, supervision and many jurisdiction-specific obligations.
Frequently asked questions
Are employee and contractor hours equivalent?
Not necessarily. Check actual workload and deliverables before comparing costs.
Can I use this to determine whether someone is legally a contractor?
No. Seek qualified local advice on worker classification and employment obligations.
What does the break-even hourly rate mean?
It is the contractor rate at which modeled annual costs would match, given the entered hours and additional expenses. It is not a market-rate recommendation.
Educational planning estimate only; not financial, legal, employment, or tax advice. Check actual prices, contracts, and local rules.
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