salary vs contracting rate comparison

[contractor79]

Let's have your thoughts/rule of thumb about comparing contract rates with a perm job salary+benefits package.

Assuming a standard benefit package for a permie, what salary would you require to leave your contract if you were currently earning from your contracting £400/day? £500/day? £800/day?

[malvolio]

Let's have your thoughts/rule of thumb about comparing contract rates with a perm job salary+benefits package.

Assuming a standard benefit package for a permie, what salary would you require to leave your contract if you were currently earning from your contracting £400/day? £500/day? £800/day?

FFS, this comes up about every three days. Assuming you ain't just another clown trying to wind everyone up, or are too dim to find the search button, it's
annual salary / 1000 = hourly rate.
Happy now?

[contractor79]

FFS, this comes up about every three days. Assuming you ain't just another clown trying to wind everyone up, or are too dim to find the search button, it's
annual salary / 1000 = hourly rate.
Happy now?

I like that, such an easy to remember little formula, would make so many people's life easier, waste less brain cells, why thankyou. Is it based on rigorous calculations?

[RichardCranium]

Is it based on rigorous calculations?

Yes, it is well known. It includes the number of hours per week as specified in your contract, the amount of leave you will take, how much time you personally will be on the bench, how much sick leave you take (including swine 'flu), your personal tax code and even any other sources of income you have as well as the specific bundle of permie benefits you are thinking of and your perceived value of them.

Clever, innit?

[TykeMerc]

I like that, such an easy to remember little formula, would make so many people's life easier, waste less brain cells, why thankyou. Is it based on rigorous calculations?

It's a very well known rule of thumb, like all rules of thumb it's an approximation.
Alternatively you could ask your imaginary friend what you should do since you believe him/her/it is an absolute authority.

[contractor79]

so are there some opportunities where the equation does not hold i.e. the contract rate is significantly higher than the permie equivalent

[contractor79]

do you like my new sig

[MPwannadecentincome]

do you like my new sig

very nice!

I too was wondering about this - with rates as they are right now I would have been better off in my old permie job and avoiding redundancy, its not by a small margin I'm losing out on its quite a big margin when benefits and pension and bonuses are taken into account.

[Stan.goodvibes]

I take it that calulation assumes you pay tax?

[malvolio]

If you take the time to work though the tax burden of an average employee and a reasonable salary/divi mix for a freelance contractor with their own company and come up with the net pay then make a sensible allowance for pensions, SSP and training costs and assuming you work 47 weeks a year, it holds fairly well.

It won't work if you use an umbrella, but then you'll be paying rather more tax than a permie anyway so more fool you.

If you want to allow for six-figure banking bonuses, offshore EBT scams or any one of a dozen other benefits that some jobs throw off then it possibly doesn't.

It's a rule of thumb to provide a rough equivalent so you can make a quick comparison. The quetion get asked every week, usually by people who can't be arsed to do some basic arithmetic.

If you want a precise answer for any given role, do it yourself with the real numbers.