From Perm annual compensation to Daily Contract rate

[denver2k]

Hi,

Im a Permenant employee planning to move into contracting. I also have an offer.

However, I would like to know if there is any formula to find the contract rate equivalent of my Perm Annual compensation.

For e.g.

Perm Total Compensation --> Contract Rate
£80,000 = ??
£90,000 = ??
£100,000 = ??
£120,000 = ??

Thanks

[northernladuk]

No there isn't. There is a really really rough sum floating around but the bottom line is they are different animals. Hopefully this thread won't descend in to another one where someone tries to sort it. There are plenty already. Check the FAQ section. There is a sticky telling you how to use Google to search the forums. Try use that to search for salary comparison or something like that. Whatever you find is going to change again come April anyway.

There are also some take home calculators on the web that will compare income but again they are very sketchy. There is just too much variance.

And BTW I wouldn't be leaving 80+k jobs to go contracting. With the tulip storm that could potentially hit us next April I would be giving that kind of salary a lot of thought so as just to pick the best jobs in case Apr is a disaster.

[Eirikur]

It is very difficult to calculate.
How much bonus do you have on average?
What other benefits pension, private health, stock options/purchase plan, staff reduction, etc
How many holidays and other paid leave such as bereavement, maternity/paternity leave
In average how many days per year are you off ill?
Do you have a company car and/or fuel card?

Some of the above such as a car may be taxed but all of the above and there's probably more is not available for contractors (for free)

[LondonManc]

Hi,

Im a Permenant employee planning to move into contracting. I also have an offer.

However, I would like to know if there is any formula to find the contract rate equivalent of my Perm Annual compensation.

For e.g.

Perm Total Compensation --> Contract Rate
£80,000 = ??
£90,000 = ??
£100,000 = ??
£120,000 = ??

Thanks

Nope. "Market" rate will depend on demand, location, perceived level of supply (quantity and to a lesser extent quality). I'd expect to get anything between £300 and £700 per day depending upon location, level of difficulty, working practices, etc.

What you'll want depends on various factors. I typically won't stay away four nights a week for less than £500 unless market is bad/war chest is low. Each to their own as personal circumstances often dictates how fussy you can be.

[WTFH]

So, you have an offer which will have a rate attached to it, and you're trying to work out is it more or less than you are currently on. i.e. you are asking the question the wrong way round.
Currently you are being paid a salary which you know, but aren't telling. You have been offered a role at an hourly/daily rate, which you also know.


Best bet would be to ask your accountant, or try websites like here:
Contractor Calculator - Take Home Pay - Limited Company Calculators - Business Calculators


But you are trying to compare things that are not directly comparable. For example, how many days paid holiday do you get in your current role?
e.g. a permie works 235 days per year, but gets paid for 260 - they get 25 days of bank holidays/public holidays/personal holidays which they are paid for. If a contractor takes 25 days off, then they get paid for 235 days. Not 260.
So, let's say you earn £1000 per day contracting and you go on a 2 week holiday where the holiday costs £2000. It costs a permie £2000. It costs the contractor £12000, because of 2 weeks lost income.

[oracleslave]

And BTW I wouldn't be leaving 80+k jobs to go contracting.

Would you leave a £750 day contract for a perm job as a VP paying 100k basic plus bonus / benefits?

[OrangeSquash]

Would you leave a £750 day contract for a perm job as a VP paying 100k basic plus bonus / benefits?

No

[SueEllen]

Would you leave a £750 day contract for a perm job as a VP paying 100k basic plus bonus / benefits?

You aren't comparing like with like.

You are presuming the contract role is exactly the same as the VP role.

[northernladuk]

Would you leave a £750 day contract for a perm job as a VP paying 100k basic plus bonus / benefits?

I don't normally command rates anything like that near home so it's a bit of a hypothetical question.

[oracleslave]

You are presuming the contract role is exactly the same as the VP role.

I wasn't but let's for arguments sake say the contract role was a Senior Project Manager role and the permie role is VP of delivery