How to use this contractor to permanent calculator
If you are comparing a contract role to a full-time permanent job, headline salary alone can be misleading. Contractors are paid for billable days, while permanent employees are paid even during annual leave and often receive additional benefits. This calculator helps translate your contract day rate into an estimated permanent base salary so you can compare opportunities more fairly.
The model is simple and practical: it annualizes your contractor income using billable time, then backs into a permanent base pay figure by accounting for bonus and employer costs. That gives you a useful salary target for negotiation and career decisions.
What the calculation includes
1) Annual contractor billing
We first calculate your annual contract revenue:
Day rate × billable days per week × billable weeks per year
This gives a realistic annual figure if you correctly estimate downtime, unpaid leave, and contract gaps.
2) Permanent compensation structure
Permanent roles usually have multiple layers of cost:
- Base salary (the number most job ads show)
- Bonus (if applicable)
- Employer on-costs such as pension contributions, employer national insurance, private healthcare, and other benefits
The calculator estimates the base salary where:
Base + bonus + employer on-costs ≈ annual contractor billing
Why this matters for job offers
Many professionals accidentally under-negotiate when moving from contract to permanent. A day rate can look high, but it carries risk: bench time, admin overhead, insurance, and less income stability. A permanent role may look lower on paper, yet include pension, paid leave, learning budget, stock, and better long-term progression.
This is why converting contract rate to salary with realistic assumptions is essential before accepting or declining an offer.
Practical assumptions to choose carefully
Billable weeks
This is the most important input. If you use 52 weeks, you may overestimate contractor annual income. Many contractors use somewhere between 44 and 48 depending on market demand and project continuity.
Employer on-costs
For UK-style comparisons, a range of 18% to 30% is common. For US or other markets, employer burden may differ significantly, especially when healthcare is included.
Bonus percentage
If bonus is not guaranteed, consider using a conservative figure (for example, 5% instead of 15%). This keeps your estimate grounded and negotiation-ready.
Example conversion
Suppose your contract day rate is £500, you expect 46 billable weeks, work 5 days per week, and compare to a permanent role with 10% bonus and 22% employer costs. The calculator will estimate a permanent base salary around the mid-£70k range. That means a £60k offer may be significantly below your current commercial value, while an offer around £75k to £85k could be more comparable depending on benefits and growth path.
Tips for using this in negotiation
- Bring a range, not a single number (e.g., “My equivalent permanent range is £78k–£85k”).
- Separate cash compensation from long-term upside (bonus, stock, promotion potential).
- Discuss total package: pension, healthcare, paid leave, training budget, and flexibility.
- Use realistic billable weeks to avoid pricing yourself out or underselling your value.
Limitations and disclaimer
This tool estimates gross compensation equivalence, not after-tax take-home pay. It does not account for specific tax structures, IR35 status, umbrella fees, LTD company expenses, regional differences, or non-cash perks with unique value to you. Use this as a strong starting point, then refine with a tax adviser or financial planner when needed.
Final thought
A contractor-to-permanent move is not just a math problem; it is also a lifestyle and risk decision. Use this calculator to ground your conversations in numbers, then decide based on your goals: stability, career trajectory, flexibility, and long-term wealth building.