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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.

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Koala's Professional Opinion

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Definition and method

What this calculator answers

Compare the annual and hourly cost of the contractor option with the employee costs you actually expect to carry.

Same workload

Apply contractor and employee cost structures to the same annual work hours. Employee cost adds the employer on-cost percentage and other annual employee costs entered by the owner.

Worked example: your figures

The interactive result above is the worked example. Change any input and the same deterministic engine recomputes the answer; this page does not insert a generic example business or silently treat example values as a benchmark.

  • No market benchmark or outcome is silently inserted by this page.

What should I check next?

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.