Freelancer Cost Calculator
Compare independent contractor and freelancer project quotes directly against equivalent fully loaded full-time employee costs and identify breakeven hiring hours.
Freelancer / Contractor Scope
In-House Full-Time Employee Comparison
Contractor vs. Employee Comparison Formula
Freelancer Cost = Hourly Rate × Project Hours; Employee Loaded Cost = (Salary × (1 + Burden %)) / 2,080 × Project Hours; Breakeven Hours = Total Annual Employee Cost / Freelancer Rate- Freelancer Rate: All-inclusive invoice rate without employer taxes, healthcare, equipment, or vacation pay obligations.
- Full-Time Loaded Rate: Salary loaded with 25% to 35% in benefits and taxes divided across 2,080 hours.
- Breakeven Threshold: Annual project hours at which hiring a full-time employee becomes cheaper than paying contractor rates.
Step-by-Step Worked Example
Calculation Steps:
- Total Freelancer Project Cost = 120 × $85.00 = $10,200.00
- Comparable Internal Employee Cost = 120 × $48.08 = $5,769.23
- Net Difference = $10,200.00 - $5,769.23 = +$4,430.77 (Employee is cheaper per hour)
- Breakeven Hiring Hours = $100,000 / $85.00 = 1,176 hours / year
How to Use This Calculator
- 1Enter the freelancer's hourly rate and estimated project duration in hours.
- 2Input the comparable full-time employee annual salary and benefit burden percentage.
- 3Review project cost comparison and annual breakeven hours.
Assumptions & Limitations
- Independent contractors cover their own equipment, self-employment taxes, and health benefits.
- Full-time employee calculations include annual employment taxes and benefits.
Frequently Asked Questions
Why are freelancer hourly rates higher than employee wages?
Freelancers must cover their own 15.3% self-employment tax, health insurance, paid vacation, unbilled sales hours, and equipment, so their billing rate must be higher to achieve equivalent take-home pay.
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