Free workforce cost tool
Contractor vs. Employee Cost Calculator
Compare the real cost of covering the same workload with an employee or a contractor, including payroll burden, benefits, productive capacity, contractor markup and overhead.
Simple comparison
Annual viewCompare one year of equivalent work
Work requirement
Employee cost
Contractor cost
Simple methodEmployee cost includes salary, entered employer payroll burden, benefits, equipment, overhead and hiring/onboarding. Contractor cost includes hourly fees for the required work, markup and other entered contractor costs. All tax, benefit and overhead rates are user inputs rather than assumed rates.
Advanced comparison
Practical headcount modelModel capacity, project duration and overhead
Work requirement
Employee productive capacity
Employee recurring cost
Contractor cost
Advanced methodEmployee productive capacity starts with paid annual hours and removes PTO, holidays, training and other nonproductive paid time. Required FTEs = required workload ÷ productive capacity. Practical employee headcount is rounded up to whole people. Employee recurring costs are prorated for the entered duration, while recruiting/onboarding is treated as a one-time cost per practical hire.
Cost bridge
Entered project durationEmployee vs. contractor cost breakdown
| Cost component | Employee | Contractor | Difference |
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Duration sensitivity
Monthly workload held constantWhich arrangement is cheaper as the engagement gets longer?
| Duration | Required hours | Employee headcount | Employee cost | Contractor cost | Lower-cost option | Savings |
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Contractor-rate sensitivity
Employee assumptions and workload unchangedCost at different contractor hourly rates
| Contractor rate | Contractor total cost | Employee total cost | Difference | Lower-cost option |
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Workload sensitivity
Project duration and rates held constantCost as monthly work demand changes
| Monthly productive hours | Theoretical FTEs | Practical headcount | Employee utilization | Employee cost | Contractor cost | Lower-cost option |
|---|
Scope
This calculator compares cost, not worker classification
Employee-versus-contractor classification depends on applicable law and the facts of the working relationship, not which option is cheaper. This calculator makes no classification determination. Payroll burden, benefits, insurance, taxes and overhead vary by employer and location, so the tool uses the values you enter rather than assuming current statutory rates. For legal, tax or classification decisions, use qualified professional guidance.
Export report
Scenario assumptions
| Input | Value |
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OfficeQ.com - Contractor vs. Employee Cost Calculator. Cost comparison only; does not determine worker classification.