Calculate contract rate based on desired income

To work out a rough contracting rate based on your existing permanent salary and a few other factors.


How much would your earn as an employee per year before tax.

Hours per year

Calculate how many hours will you be available to work/invoice per year.

For a normal fully booked year this is between 1400 to 2000 hours, or 200 to 260 days.

You need some holidays and you may be sick. You may want to take time off for training and conferences. You will need time for administration and sales/interviews.

Additional cost

0 indicates no additional cost. Default: 30% means 30% additional costs.

If you are looking for how much you can earn in relation to your current salary, then enter your estimated additional cost to the employer.

The employee's salary is not the employers only cost per employee. The company also have to pay for your benefits, insurance, company tax, office space, utilities, admin staff, training, hardware, licenses, liabilities, etc. This can be as low as additional 30% cost per employee, however in some countries and companies this can be 2x or 3x the salary.

However if you are looking for what you need to charge for equivalent salary, then you need to enter your estimated additional costs as a self employed contractor instead: pension, insurance, accountants, agents, invoice factoring, PCs, mobiles, tools, licenses, hosting, training, conferences, commuting cost, non-invoiceable time for admin, support, sales & interviews, etc.

If you want to cut things to the bone, pick a percentage closer to 0.


100% indicates full utilisation. Default: 90% utilisation, ie. you loose 10% of your income.

How long a gap will you have between contracts. It is difficult to finish one contract on a Friday and always having another starting the following Monday. Some bench time must be expected, 2 weeks here, a few days there or worse.

You might also have a contract suddenly terminated due to client finances or other factors.

Tax difference

10 means 10% more tax, -20 means 20% less tax, ie earn 20% more. Default: 0 means no difference.

As a contractor with your own limited company you might pay less tax personally compared to a permanent employee. However in the UK IR35 means some umbrella contractors pay more than permanent employees.

Risk factor

20 means 20% higher rate to accept contracting risk. Default: 0% means no risk considered.

As a contractor you take considerable more risk with your income compared to a permanent employee.

Risk of reduced utilisation due to unforeseen cancellation or early contract termination, unpaid invoices, expensive legal liabilities not covered by insurance and more.