Free calculator
Employee vs Contractor Cost Calculator
Compare what each staffing option would cost for the work you need, over one period and in one currency. Enter your own figures — the calculator assumes no tax rates, keeps one-off costs apart, and shows any cost you have not entered as unknown.
What would each staffing option cost for the work I need?
Salary or wages, including paid leave — do not add leave pay again
Employer taxes and contributions from your payroll provider or accountant; 0 if none
Pension, health cover, allowances you pay; 0 if none
Laptop, phone, software, training for the period; 0 if none
Advertising, agency fees, setup — kept apart from ongoing costs; 0 if none
After paid leave, public holidays, sickness and training
The hours of work you would buy
Agency or platform fees, agreed expenses; 0 if none
Equipment you would supply, or your time managing them; 0 if none
Nothing is saved or sent anywhere.
Result
Enter your numbers
The formulas
Employee ongoing cost = gross pay + employer contributions + benefits + recurring costsEmployee cost per productive hour = ongoing cost ÷ productive hoursContractor cost = hourly rate × hours + fees + equipment or coordination costsDifference = contractor cost − employee ongoing cost (same hours only)Worked example
An employee costs 60,000 gross + 6,000 employer contributions + 4,000 benefits + 2,000 equipment = 72,000 a year, for 1,600 productive hours: 45 an hour. Recruitment adds a one-off 1,500.
A contractor at 50 an hour for the same 1,600 hours, plus 2,000 of fees, costs 82,000 (51.25 an hour). For this scope the contractor costs 10,000 more in ongoing cost, or 8,500 more in the first year once the one-off recruitment cost is counted.
What the result means — and what it does not
- It compares only the costs you enter, for the hours you enter.
- When the hours differ, it says the options are not like-for-like instead of picking one.
- It is not tax, employment or legal advice, and it does not classify workers.
Common questions
Why does a blank cost stop the comparison?
Because a blank is not the same as zero. Employer contributions or a contractor’s agency fee can change the answer, so the calculator shows them as unknown until you enter an amount. If there genuinely is none, enter 0.
How should I handle paid leave?
Gross pay usually already includes paid leave, so do not add it again. Instead, reduce the employee’s productive hours by the leave, public holidays, sickness and training you expect. That is what makes the cost per productive hour realistic.
Where do I get employer contributions?
From your payroll provider, accountant or the official guidance where you operate. The calculator deliberately assumes no rates, because they differ by country, region and pay level.
Does this tell me whether someone is an employee or a contractor?
No. Employment status depends on how the work is actually done and on the law where you operate, not on cost. This calculator compares the costs you enter and makes no classification or legal recommendation.
Why are one-off costs separate?
Recruitment and onboarding are paid once, not every period. Mixing them into the ongoing cost would overstate the employee’s cost in later periods, so they are shown separately and in a first-period comparison.