Structuring Corporate Contractor Contracts

When moving from full-time employment to freelance contracting, calculating your target hourly rate requires more than simple division.

Accounting for Unpaid Time

As a contractor, you must absorb the cost of unpaid vacations, sick leave, health insurance, and self-employment taxes. Therefore, a contractor making $50/hour is generally netting significantly less than a W-2 employee making $100,000 annually. It's recommended to add a 25-30% premium to your base salary calculation when proposing contractor rates.

Retainers vs. Hourly Billing

Once you establish your baseline hourly rate using the calculator, consider transitioning clients to monthly retainers. This provides predictable income and removes the friction of tracking minutes, ultimately building stronger, trust-based corporate relationships.