How to compare a day rate with a salary
A contractor day rate sounds straightforward, but the comparison with a salary is rarely apples-to-apples. Salaried employees get paid for holidays, sick days, and time between projects. Contractors don’t.
Worked example. A $500/day contract over 220 billable days generates $110,000 gross. A salaried role at $90,000 with no additional benefits leaves a $20,000 gap in favour of the contract. Add a 20% benefits uplift to the salary ($18,000), and the gap narrows to $2,000.
The benefits gap
Employer pension contributions, health cover, and paid leave are real money. A 20–30% benefits uplift on salary is common. Enter it in the benefits field to include it in the employee total and get an honest comparison.
Rainy-day buffer
As a contractor you cover your own leave and sick days. Many contractors set aside 10–15% of contract income to self-fund these. Factor that cost in before concluding the contract pays more.