Comparing a $28/hour contract role with a $55,000/year full-time offer should be simple - but it rarely is. There are working hours, holiday entitlement, and pay cycles to account for. This guide covers everything you need to make an accurate comparison.
Use the Hourly to Salary Calculator to convert any hourly rate to its annual, monthly, bi-weekly, and weekly equivalents instantly.
The Basic Formula
Annual salary = Hourly rate × Hours per week × Working weeks per year
Example: $28/hour × 40 hours × 50 weeks = $56,000/year
The critical variable is "working weeks." Full-time employees typically work 50–52 weeks (with paid holiday). Contractors often work fewer billable weeks due to gaps, unpaid leave, and admin time.
Quick Reference: Common Hourly Rates to Annual Salary
Based on 40 hours/week, 50 working weeks:
| Hourly Rate | Annual Salary | Monthly |
|---|---|---|
| $15/hr | $30,000 | $2,500 |
| $20/hr | $40,000 | $3,333 |
| $25/hr | $50,000 | $4,167 |
| $30/hr | $60,000 | $5,000 |
| $35/hr | $70,000 | $5,833 |
| $40/hr | $80,000 | $6,667 |
| $50/hr | $100,000 | $8,333 |
| $75/hr | $150,000 | $12,500 |
| $100/hr | $200,000 | $16,667 |
Try the Hourly to Salary Calculator - free, instant results.
Open toolUnderstanding Bi-Weekly Pay
In the US, most salaried employees are paid bi-weekly - every two weeks, for 26 pay periods per year. This differs from semi-monthly pay (twice a month, 24 periods).
Bi-weekly pay = Annual salary ÷ 26
For a $60,000/year salary: $60,000 ÷ 26 = $2,307.69 per pay cheque
Two months per year will have three paycheques (bi-weekly quirk). Budget based on 24 periods for predictability, treat the extra two as a bonus.
Hourly vs Salary: What's the Real Difference?
The employment classification matters beyond just the pay rate.
Salaried Employees
- Guaranteed weekly pay regardless of hours worked
- Typically exempt from overtime (if earning over $684/week under FLSA)
- Often receive benefits: health insurance, pension contributions, paid leave
- Pay does not fluctuate month-to-month
Hourly Workers
- Paid only for hours worked
- Entitled to overtime pay (time-and-a-half for hours over 40/week under FLSA)
- Benefits vary widely - many contract roles exclude them
- More flexibility, but less income predictability
For freelancers and contractors, the hourly-to-salary conversion often understates your true needs. You should factor in:
- Unpaid gaps between contracts
- Self-employment tax (15.3% in the US)
- Employer benefits you are funding yourself (health insurance, retirement)
- Business expenses
The Freelance Rate Calculator helps you account for all of these when setting your rate.
How to Compare a Salary Offer to a Contract Rate
When you receive both types of offers, convert them to a common unit. Use annual salary equivalent for comparisons.
Salaried offer: $65,000/year + benefits (health insurance ~$8,000/year value, 401k match ~$2,600) Total package value: ~$75,600/year
Contract offer: $42/hour, 40hr/week, 50 weeks Gross annual equivalent: $84,000/year
On paper the contract pays more. But the contractor also pays self-employment tax (~$12,000 on that income), funds their own health insurance, and has no paid leave. Net position is significantly closer than it appears.
Always compare take-home figures, not gross rates.
Part-Time and Reduced-Hours Calculations
Not all roles are 40-hour weeks. Adjust accordingly:
32 hours/week, 52 weeks: $25/hour = $25 × 32 × 52 = $41,600/year
20 hours/week, 50 weeks: $35/hour = $35 × 20 × 50 = $35,000/year
The Hourly to Salary Calculator lets you input any combination of hours per week, weeks per year, and holiday weeks.
Converting Annual Salary Back to Hourly
Sometimes you know the salary and want the hourly rate. The reverse formula:
Hourly rate = Annual salary ÷ (Hours per week × Working weeks)
Example: $72,000/year, 37.5 hours/week, 48 working weeks (4 weeks holiday) $72,000 ÷ (37.5 × 48) = $72,000 ÷ 1,800 = $40/hour
Use the Salary to Hourly Calculator for this direction.
Tips for Negotiating Pay
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Research market rates. Sites like Glassdoor, Levels.fyi, and LinkedIn Salary show what comparable roles pay in your location.
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Anchor high. When negotiating, name your rate first if you can. Research supports that the first number stated shapes the final outcome.
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Value the whole package. Base pay is one component. Bonus structure, equity, remote flexibility, and benefits can add 20–30% to the value of a role.
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Don't compare gross-to-gross. Account for tax, benefits, and working hours before deciding which offer is genuinely better.
Use the Hourly to Salary Calculator to run any scenario in seconds.