Compare total cost of hiring a contractor vs full-time employee including benefits, taxes, overhead, and productivity factors.
Hiring choices rarely reduce to hourly rate versus salary. This calculator builds separate contractor and full-time employee cost pictures from compensation plus entered benefits, employer taxes, overhead, and productivity assumptions, then places the results on a comparable basis. It is intended for budgeting a role or engagement, not deciding legal worker status. A common surprise is that an employee's salary is only one part of employer cost, while a contractor's quoted rate may already cover costs that would be separate employee expenses. Avoid counting the same item twice.
The calculation puts both hiring choices on the same time basis. On the employee side, compensation is combined with entered employer payroll taxes, benefits, and workplace overhead. On the contractor side, the quoted compensation is combined with applicable supporting costs. The work period and expected workload must match, or the two totals represent different amounts of work.
A productivity factor lets the comparison reflect expected output as well as cash cost. It is an assumption, not a separately paid expense, so its meaning and direction must be checked before interpreting the result. A modest change in expected productivity can alter which option appears less expensive, particularly when the unadjusted totals are close.
No. First put both amounts on the same work period and workload, then include costs paid in addition to employee salary. Also check whether the contractor bills for every scheduled hour and whether the quoted rate already includes expenses. Comparing an hourly quote with an annual salary alone usually leaves unlike units and cost components.
No. The result is a cost comparison, not a worker-classification decision. Tax and employment classifications depend on facts such as behavioral control, financial control, and the nature of the relationship. A contractor label or invoice does not settle that question. Obtain jurisdiction-specific advice when the intended working arrangement is uncertain.
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