Is the salary or contract offer worth more?

Add the value of salary, bonus, retirement money, and benefits. Compare it with contract money left after unpaid invoices, business savings, and costs.

Higher entered economic value

Employee

$13,880 ahead before personal income tax using the entered benefits, paid client hours, paid invoices, reserve, and business costs.

Employee package: $125,000
Contract amount: $111,120
Equivalent contract rate: $111.27 / hr

See the full calculationFollow each number from the inputs to the answer.

Calculation 1

Compare the employee package with the contract

What are we finding?

We are finding which option leaves more entered value before personal income tax.

What do these numbers mean?

Employee package: $125,000: Salary, bonus, employer retirement money, and the entered value of other benefits.
Contract invoices: $144,000: Contract rate times yearly billable hours.
Contract money collected: $136,800: 95% of invoiced money is expected to arrive.
Business reserve: $13,680: Collected money kept inside the business instead of treated as personal pay.
Business costs: $12,000: Entered yearly costs of doing the contract work.

How do we calculate it?

Add all entered employee pay and benefits. For the contract, calculate billable hours times rate, keep only the collected share, then subtract the business reserve and business costs. Subtract the employee package from the contract amount.

difference = contract collected − reserve − business costs − employee package

$136,800 − $13,680 − $12,000 − $125,000

The entered employee salary, bonus, retirement money, and benefits add up to $125,000.
1,440 yearly paid client hours times the entered rate produces $144,000 in client bills.
After expected collection, the contract brings in $136,800.
Subtract $13,680 kept in the business and $12,000 of business costs. That leaves $111,120.
$111,120 minus $125,000 equals -$13,880.

Final answer

Employee is ahead by $13,880

What does the answer mean?

This comparison is before personal tax. It does not decide worker classification, legal rights, job security, insurance needs, or the personal value of flexibility.

Your offer details

Compare before personal income tax. Enter only benefits and costs that matter to your offers. StepShown does not apply national averages or make a worker classification.

Employee offer

Yearly salary

Expected yearly bonus

Employer retirement contribution

Other employer benefits you value

Paid days away from work

days

Employee work hours each week

hours

Contract offer

Contract hourly rate

Contract working weeks

weeks

Total contract work hours each week

hours

Billable contract hours each week

hours

Invoices you expect to be paid

Paid invoice money kept in the business

Yearly contract business costs

Checking which numbers are included in this page address…

“Copy result summary” includes the main answer and three important results. An answer can still reveal something about a number you removed from the link.

Opening a link sends its full page address to the company that hosts StepShown. Never put private information in a shared StepShown link.

Compare annual economic value

The employee package includes entered benefits. The contract amount subtracts collection loss, reserve, and business costs.

What you are looking at: Employee package and contract economic value comparison

Employee package$125,000
Contract amount$111,120

Main takeaway: a longer bar means a larger amount. The written number gives the exact value.

What this means

Check this carefully

The employee package is ahead by $13,880

The employee choice is worth $125,000 from salary, bonus, retirement money, and benefits. The contract choice leaves $111,120 after unpaid bills, money kept in the business, and yearly business costs. Both amounts are before personal income tax.

How to read this

$111.27 / hr gives the same entered value as the employee package

This rate keeps contract weeks, paid client hours, unpaid bills, money kept in the business, and business costs the same. It is the point where the math is equal, not a rate a client has offered.

How to read this

30.0 of 40.0 weekly contract hours can be billed to a client

75% of contract work time can create client bills.

How to read this

This does not decide taxes or legal worker status

This leaves out personal and business taxes, legal worker status, job loss risk, insurance, legal responsibility, payment timing, demand, retirement rules, and how much you value flexibility. The real working relationship and local law decide worker status, not the name on an offer.

Stress test the contract plan

Each row changes one operating assumption and keeps the employee offer fixed.

What you are looking at: Employee package and contract amount after changing paid invoices, paid client hours, or money kept in the business. Each row changes one choice while the other entered numbers stay the same.

Employee package and contract amount after changing paid invoices, paid client hours, or money kept in the business
Choice	Employee package	Contract amount	Difference
Your comparisonYour planAs entered	$125,000	$111,120	$13,880 employee lead
Every invoice collectedAll else unchanged	$125,000	$117,600	$7,400 employee lead
Five more paid client hoursTotal hours unchanged	$125,000	$131,640	$6,640 contract lead
No business reserveCosts still included	$125,000	$124,800	$200 employee lead

Main takeaway: the shaded row is your plan now. Read across another row to see what one change would do.

Time and cash view

Annual values remain before personal income tax.

Employee package per working hour: $65.10 / hr; 1,920 modeled working hours
Contract value per total work hour: $57.88 / hr; 1,920 total working hours
Contract amount invoiced: $144,000; 1,440 paid client hours
Contract amount collected: $136,800; 95% of invoices

Take it with you

Your inputs are already saved in this page’s URL.

Checking which numbers are included in this page address…

“Copy result summary” includes the main answer and three important results. An answer can still reveal something about a number you removed from the link.

Opening a link sends its full page address to the company that hosts StepShown. Never put private information in a shared StepShown link.

How this tool was checked

Sources and review

Code and tests checked

StepShown checked the calculation code and its tests. The answer is still an estimate, not professional advice. Rules can also be different where you live.

Calculation version: Version 1.0
Last updated: Jul 29, 2026
Person responsible: StepShown engineering

Employer Costs for Employee Compensation
Published by U.S. Bureau of Labor Statistics. Area covered: United States. StepShown owner: StepShown editorial. Checked Jul 29, 2026. Check again by Jan 25, 2027. Treating wages and employer paid benefit costs as distinct parts of employee compensation. StepShown does not use the published national averages as offer defaults. Reference guidance; no date specific value is ingested.
Independent contractor, self employed, or employee
Published by Internal Revenue Service. Area covered: United States. StepShown owner: StepShown editorial. Checked Jul 29, 2026. Check again by Jan 25, 2027. The boundary that worker status depends on the facts of the relationship, including control, and cannot be established by the label used in an offer or calculator. Reference guidance; no date specific value is ingested.
Manage your finances
Published by U.S. Small Business Administration. Area covered: United States. StepShown owner: StepShown editorial. Checked Jul 29, 2026. Check again by Jan 25, 2027. Tracking available cash, accounts receivable, accounts payable, payroll, and the timing difference between accrual and cash accounting. Reference guidance; no date specific value is ingested.

Read the StepShown calculation and writing rules, or report a problem.

Learn more

How the comparison works

The employee package adds the salary, expected bonus, employer retirement contribution, and only the other benefits you enter. Paid days away reduce modeled working hours but do not reduce the annual package value.

Employee package: salary plus bonus plus retirement plus entered benefits
Contract invoices: hourly rate times annual billable hours
Contract amount: collected invoices less business reserve and business costs
Equivalent rate: rate required for the contract amount to reproduce the employee package

Contract billable time cannot exceed total contract work time. The value per total work hour includes administration, sales, and other entered working time even when those hours do not create an invoice.

Both sides remain before personal income tax. The calculator does not estimate taxes, determine legal worker status, value unemployment protection, predict demand, or decide how much stability and flexibility are worth to you.

Common questions

What belongs in employer benefits?

Enter only benefits you can value for this decision, such as an employer health contribution, disability coverage, life insurance, education support, or other employer paid items. Do not use a national average as though it were your offer.

How is paid time away treated?

Salary and entered benefits remain in the package while paid days away reduce modeled employee working hours. StepShown assumes five workdays per week for this hourly view. Holidays and sick time should be included only when you want them represented.

Why separate total and billable contract hours?

Contractors may spend time on proposals, administration, bookkeeping, training, client communication, and gaps between assignments. That time affects economic value even when it is not invoiced.

Does the contract amount include taxes?

No. It is collected revenue after the selected business reserve and entered business costs, but before personal and business taxes. Tax treatment depends on location, entity, deductions, and facts that this tool does not collect.

Does a contract label prove independent contractor status?

No. Worker classification depends on the actual relationship, including control and other facts under applicable law. This comparison does not make a legal classification.

What is not modeled?

Taxes, overtime, equity, vesting, severance, unemployment protection, insurance gaps, liability, payment timing, currency, demand, rate changes, legal classification, and the personal value of stability or flexibility are outside the model.

Turn the contract side into a sustainable freelance rate, then test offer economics and cash timing.

Or browse everything in Business.

Calculation 1

Compare the employee package with the contract

What are we finding?

We are finding which option leaves more entered value before personal income tax.

What do these numbers mean?

Employee package: $125,000: Salary, bonus, employer retirement money, and the entered value of other benefits.
Contract invoices: $144,000: Contract rate times yearly billable hours.
Contract money collected: $136,800: 95% of invoiced money is expected to arrive.
Business reserve: $13,680: Collected money kept inside the business instead of treated as personal pay.
Business costs: $12,000: Entered yearly costs of doing the contract work.

How do we calculate it?

difference = contract collected − reserve − business costs − employee package

$136,800 − $13,680 − $12,000 − $125,000

The entered employee salary, bonus, retirement money, and benefits add up to $125,000.
1,440 yearly paid client hours times the entered rate produces $144,000 in client bills.
After expected collection, the contract brings in $136,800.
Subtract $13,680 kept in the business and $12,000 of business costs. That leaves $111,120.
$111,120 minus $125,000 equals -$13,880.

Final answer

Employee is ahead by $13,880

What does the answer mean?

This comparison is before personal tax. It does not decide worker classification, legal rights, job security, insurance needs, or the personal value of flexibility.

Is the salary or contract offer worth more?

Compare the employee package with the contract

What are we finding?

What do these numbers mean?

How do we calculate it?

What does the answer mean?

The employee package is ahead by $13,880

$111.27 / hr gives the same entered value as the employee package

30.0 of 40.0 weekly contract hours can be billed to a client

This does not decide taxes or legal worker status

Sources and review

How the comparison works

Common questions

Where to go next

Compare the employee package with the contract

What are we finding?

What do these numbers mean?

How do we calculate it?

What does the answer mean?

The employee package is ahead by $13,880

$111.27 / hr gives the same entered value as the employee package

30.0 of 40.0 weekly contract hours can be billed to a client

This does not decide taxes or legal worker status