Freelance vs full-time job calculator
Salary is not total comp, and your rate is not net income. Compare both properly.
A salary hides pension matching, employer-paid health cover and paid leave. An hourly rate hides self-employment tax, unbilled weeks and the cover you now buy yourself.
This calculator puts both on the same footing and tells you the rate you would need to charge to match the job.
The comparison almost everyone gets wrong
Someone with a $95,000 offer and someone freelancing at $95 an hour will compare $95,000 to $190,000 and conclude the choice is obvious. It is not. The salary figure is not the value of the job, and the hourly rate is not the value of the freelancing. Both numbers hide most of what matters.
A job pays you in currencies that never appear on the payslip: the employer's pension contribution, the health premium paid on your behalf, and the days you are paid to do nothing. Freelancing costs you in currencies that never appear on an invoice: the 15.3% self-employment tax, the health cover you now buy yourself, and the weeks nobody bills you for. Put both sides on the same footing and the answer often flips.
What the job is really worth
Three items sit on top of the salary:
- Employer retirement matching. A 4% match on $95,000 is $3,800 a year of money you do not have to fund yourself. It is compensation, and it is invisible if you only look at gross pay.
- Employer-paid health premiums. The employer share of a US family premium commonly runs into five figures a year. When you freelance, that becomes a line you pay — the calculator charges it to the freelance side for exactly this reason.
- Paid time off. Twenty days of PTO is twenty days you would otherwise have to fund out of your own pocket. Priced at your daily rate, that is a genuine benefit with a real dollar value.
Add them and a "$95,000 job" is frequently worth $115,000 or more in total compensation. That is the number freelancing has to beat, not the salary.
What freelancing really costs you
The freelance side then has three leaks that a rate card never shows.
Self-employment tax. As an employee you pay 7.65% of payroll tax and your employer quietly pays the other half. Freelancing, you pay both: 15.3% on 92.35% of net profit. On $90,000 of profit that is roughly $12,700 before a penny of income tax.
Your own cover. Health insurance, and possibly disability and liability cover, move from the employer's budget to yours. Some of that is offset by the self-employed health insurance deduction, which cuts your tax bill twice — but it is still a real cost you now fund.
Unbilled time. This is the one that stings. A job bills all 260 working days and pays you for 240 of them. A freelancer billing 46 weeks has six weeks with no revenue, and the admin, sales and revision work happens inside the remaining weeks rather than outside them. It is why the calculator asks for billed hours separately from hours worked.
The number that actually settles it
Rather than comparing two totals that are hard to weigh, ask the sharper question: what rate would I have to charge to match this job?
That single figure collapses every hidden cost into one number you can act on. If the answer is $62 an hour and you are already charging $95, the job is not close. If the answer is $140 and your market rate is $95, the job is better paid than your freelancing, whatever the headline comparison suggested. The calculator produces it directly.
People are usually surprised by how high it comes out. That is not an argument against freelancing — it is the price of the things an employer was quietly buying for you.
Why the answer is still not just about money
Even when the job wins on arithmetic, freelancing has real, non-financial value: control over the work, the ability to raise your rate without a review cycle, and client diversification instead of a single employer who can end your income with one meeting. Many freelancers also find the required rate is reachable within a year or two of repositioning, which changes the calculation entirely.
The reverse risks are equally real. No paid holiday, no sick pay, no unemployment insurance, and the ever-present danger of client concentration — one client holding most of your revenue is a job with none of the protections. Weigh the gap alongside those factors, not instead of them.
How to use it as a decision tool
Run it twice. First with your honest, realistic figures — the clients you actually have, the weeks you actually bill. Then run it again with the figures you believe are achievable in twelve months: a higher rate, fuller pipeline, better clients. If the first run says the job wins and the second says freelancing wins by a wide margin, the real question is not which pays more today, but whether you can survive the gap in between.
Estimates only. This comparison is pre-income-tax and pre-deduction on both sides, which keeps the two comparable but does not model your final tax position. It assumes you buy cover equivalent to the employer premium and that your freelance work generates net profit after expenses. It does not value equity, bonuses, job security, or the tax deductions available to a business owner. Confirm your own position with a tax professional — see the disclaimer.
Frequently asked questions
Is freelancing better paid than a salaried job?
It depends entirely on your rate and how many hours you actually bill, not on the headline comparison. A job bundles in pension matching, employer-paid health premiums and paid time off; freelancing makes you fund all three yourself plus the full 15.3% self-employment tax. The cleanest test is the rate you would need to charge to match the job total compensation.
Why do I need to charge more per hour as a freelancer?
Because an hour of freelance billing has to cover costs an employer was paying for you: the employer half of payroll tax, health cover, paid holiday and pension matching, plus the hours you spend on sales and admin that nobody invoices. Those costs are real even though they never appear on an invoice.
How does self-employment tax change the comparison?
Employees pay 7.65% in payroll tax and their employer pays the other half. Freelancers pay both halves — 15.3% on 92.35% of net profit. On $90,000 of profit that is roughly $12,700, before any income tax. Any freelance-versus-job comparison that ignores it overstates the freelance side substantially.
Should I count the value of paid time off?
Yes. Paid holiday is compensation you would otherwise have to fund from your own revenue. Twenty days of PTO at a $95,000 salary is worth about $7,300 a year. A freelancer taking the same time off earns nothing during it, which is why the calculator asks for the weeks you actually bill rather than 52.
What billed hours should I assume as a freelancer?
Be conservative and use hours you actually invoice, not hours you work. A full-time freelancer might work 45 hours but bill only 25 to 30, because selling, admin, revisions and scope creep consume the rest. Assuming 40 billed hours a week is the most common reason these comparisons come out too optimistically.
Does this account for income tax?
No, deliberately. Both sides are compared before income tax so the two are on the same footing — the job salary and the freelance net profit are both pre-income-tax figures. Your actual take-home depends on filing status, deductions and state, none of which change which side is better paid.