HowTo: Calculate Contract Rate

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:

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.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s