HowTo: Calculate Contract Rate
Allot of IT people don’t really understand how to calculate contracting rate, especially if you are moving from Full-Time employment to Contract:
Firstly, Calculate the number of working days:
- 104 weekends
- 13 public holidays
- 20 days leave (You will be forced to take leave in most companies and you should)
- 10 days sick leave (you will get sick)
- This equals 218 working days per year.
So, to calculate how much you will earn for X term of a contract is:- 218 * day/rate is your total Salary
You will also need to take into consideration the following deductions:-
- Administration Fee (1.5% Contract Rate) will be charged
- Insurance cover (1% Contract Rate) will also be taken out from your rate.
- Salary Protection Insurance (Recommend if you have kids.)
You can then figure out Super, Tax and Net Income:
- Calculate Super and Tax – Use this to calculator figure out your net income – http://www.paycalculator.com.au/
Suggest you compare Net Income of a Contract role to a Full-time employment role and benefits like yearly training, bonus and other benefits..etc.. (e.g. Redundancy, Long service leave, Parental leave, Medical Insurance and Training, etc. )
Contracting rate should be much higher than a standard income as contractors need to be compensated for the above overheads.