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