MarginKoala

Is a contractor cheaper than an employee?

Enter your numbers below. Get the answer first, then Koala's next move.

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Numbers to enter
Compare both options against the same workload. Enter your actual local employer on-costs rather than relying on a generic payroll-burden percentage.
$

Use the amount the business actually pays for one contractor hour. Include non-recoverable taxes/fees if they are a real cost to you.

$

Use the base paid rate for the same work.

%

Enter your own combined employer-side cost rate for items that genuinely scale with wages. Depending on jurisdiction this can include pension/super, payroll taxes, workers compensation, leave loadings or benefits. Do not use a generic percentage without checking what applies to you.

$

Optional fixed costs such as equipment, licences or benefits not already included in the percentage above.

Koala's Calculated Result
Annual cash-cost comparison for the same modelled hours.
MarginKoalaKoala's Professional Opinion

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Frequently asked questions

When is a contractor cheaper than an employee?

When the all-in annual cost is lower — contractor hourly × expected hours × weeks vs. employee wage × (1 + payroll burden). The crossover happens earlier at higher burden, lower utilisation and longer engagement windows.

Contractor vs Employee Cost

What is the "fully-loaded" employee cost?

It's wages plus employer-side payroll taxes, benefits, superannuation, workers comp and any per-head overhead. The cost of employing a person, not just the wage on the paycheque — the right number for any hire-vs-outsource decision.

Contractor vs Employee Cost

What burden rate should I use?

This is a planning calculation, not a substitute for the accounting or tax treatment required in a particular jurisdiction. Use the same accounting basis and definitions as the business records, and apply jurisdiction-specific rules only when they have been verified for that entity and period.

Contractor vs Employee Cost

What does the per-hour comparison reveal?

Annual difference ÷ yearly hours is the per-hour saved. Pairs the cost read with the engagement size — helpful when a part-year or short-engagement step is on the table.

Contractor vs Employee Cost

Educational use, not financial advice. Numbers are estimates for planning; consult a qualified professional before acting on them.