Employee vs Contractor Cost Calculator
Compare the true cost of hiring an employee versus an independent contractor.
Includes taxes, benefits, and overhead.
Cost Comparison
True employee cost goes well beyond the base salary.
Total Employee Cost = Salary + Payroll Taxes + Benefits + Overhead
Typical employer costs on top of salary:
| Cost Component | Typical % of Salary |
|---|---|
| FICA (Social Security + Medicare) | 7.65% |
| Unemployment taxes (FUTA/SUTA) | 2–6% |
| Health insurance | 10–15% |
| Retirement match | 3–6% |
| Paid time off | 5–10% |
| Workers comp insurance | 1–3% |
| Equipment & overhead | 5–10% |
Rule of thumb: An employee costs 1.25× to 1.4× their base salary.
Contractor comparison:
- No payroll taxes for the hiring company
- No benefits required
- No equipment or overhead costs
- Higher hourly rate but potentially lower total cost