Whats the best way to convert a contractor's rate to an employee's rate


1 Answer 1


You have to estimate based on several criteria:

Employment taxes for an employee are around 15% of wages. Add in the cost of any benefits like paid time off, holiday pay, plus any added costs around equipment, computers, supplies, extra coffee, etc. As a rule of thumb, an employee is 25% more on the low end, and even as high as 40% or more on the high end.

In other words, if you are considering hiring a former contractor as a full time employee, knocking ~25% off his contractor rate is reasonable, and there is room to negotiate based on the benefits you offer.

  • Math addendum: I realize 25% off the higher value is not the same amount as 25% more than the lower value, please calculate accordingly.
    – Rocky
    Feb 11, 2016 at 17:15

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