👥
Employee vs. Contractor Cost
True total cost of an employee vs. a contractor, including taxes, benefits, and overhead
Advertisement
Employee Costs
$
$
$
$
Life insurance, dental, vision, transit, perks, etc.
Contractor Costs
$
$
True Annual Cost Comparison
Employee
$108,156.35
$52.00/hr effective
Contractor
$150,000.00
$75.00/hr × 2,000 hrs
The employee costs $41,843.65 less per year
Employee Cost Breakdown
Base Salary$85,000.00
Employer FICA (7.65%)$6,502.50
Health Insurance$6,000.00
Retirement Match (3%)$2,550.00
PTO (15 days)$4,903.85
Equipment / Setup$2,000.00
Other Benefits$1,200.00
True Total Cost$108,156.35
Break-even contractor rate: $54.08/hr at 2,000 hrs/yr — the rate at which contractor = employee total cost.
Advertisement