Is a contractor more expensive than an employee?

Compare loaded cost to actual days, not rate to salary. A $110,000 employee at 28% burden plus $9,000 overhead costs about $149,800 a year — roughly $815 per productive day. A $720/day contractor for 170 days is $122,400. At full-year workloads the employee usually wins; at partial ones, the contractor.

What does an employee really cost per day?

Loaded cost divided by productive days: salary plus burden and seat overhead, over roughly 230 working days times the productive share (75–85%). The $478/day a $110,000 salary suggests becomes about $815 once counted honestly — which is why contractor rates only look outrageous next to the wrong number.

When does hiring beat contracting?

When the workload is steady and full, the knowledge should compound in-house, and the horizon is years: the loaded employee then buys more productive days per euro. Spikes, specialties and partial-year needs price the other way. The instrument's days input finds your crossover exactly.

Contractor vs Employee Cost Calculator — True Comparison

Your details

Currency symbol display only

Employee base salary

Σ/ yr

Employment burden

Employer taxes, pension, insurance, benefits — the statutory and customary load on top of base.

Seat overhead

Σ/ yr

Equipment, software, workspace, admin per head.

Productive share of the employee year

Leave, training, meetings, internal load — a strong full-timer delivers 75–85% of paid time to the actual work.

Contractor day rate

Days of contractor you'd actually buy

days / yr

The equivalent workload — usually well under a full year, which is half the argument.

Everything is calculated in your browser as you type. Nothing you enter is sent or stored, and no account is needed.

Your result

The contractor, at this workload.

0.82×

contractor cost against the loaded employee year, at these hours

Two ways to buy the work

	The employee	The contractor
Headline figure	—	—
True annual cost	—	—
Cost per productive day	—	—
The year's difference	—	—

Three workloads, same choice

If the work is really	Contractor / yr	vs loaded employee
—	—	—
—	—	—
—	—	—

What moves this result

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Worth checking

The crossover is workload: contractors win partial years and spikes; employees win steady full loads. The days input is doing most of this page's work — be honest about it.

Misclassification is a legal line, not a spreadsheet cell. A contractor who works like an employee is an employee in most jurisdictions, with back-taxes attached; the arithmetic here assumes the structure is legitimate.

Knowledge walks out with the contractor and compounds in the employee — a term with no cell in this table that decides more hires than the table does.

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Common questions

Is a contractor more expensive than an employee?: Compare loaded cost to actual days, not rate to salary. A $110,000 employee at 28% burden plus $9,000 overhead costs about $149,800 a year — roughly $815 per productive day. A $720/day contractor for 170 days is $122,400. At full-year workloads the employee usually wins; at partial ones, the contractor.
What does an employee really cost per day?: Loaded cost divided by productive days: salary plus burden and seat overhead, over roughly 230 working days times the productive share (75–85%). The $478/day a $110,000 salary suggests becomes about $815 once counted honestly — which is why contractor rates only look outrageous next to the wrong number.
When does hiring beat contracting?: When the workload is steady and full, the knowledge should compound in-house, and the horizon is years: the loaded employee then buys more productive days per euro. Spikes, specialties and partial-year needs price the other way. The instrument's days input finds your crossover exactly.

How this is calculated

Everything below is calculated from your inputs. Nothing is fetched, nothing is looked up.

employee   = salary × (1 + burden) + overhead
per_day    = employee / (230 × productive_share)
contractor = day_rate × days_bought
gauge      = contractor / employee

The gauge reads the contractor's annual cost against the loaded employee year, parity at 1.0. The per-productive-day line is the honest unit: a $110,000 salary is not $478 a day once burden, overhead and the productive share are counted — it is usually within sight of the contractor rate that looked outrageous.

Limitations. Ramp time, management load, agency margins and jurisdictional classification rules all move the figure; equity and retention risk sit outside. The instrument prices the year — the relationship is your desk's work.

Contractor or Employee