Quick question: My wife is on the job hunt and is considering a possible contract/freelance role which would average 30-40 hours per week. Her past two jobs have been salaried, her last one with full benefits (health insurance, 401k, etc.). With this in mind, does anyone have suggestions for a rough formula for determining what she should be negotiating for an hourly rate based on a comparable salaried position? If she moves forward, she will be paying health insurance, retirement, etc. out of pocket, along with self-employment tax.

For most companies, covered benefits are about 20-25% compared to the cost of salaries.

I would do the hourly rate x 40 x 50 to get a rough ballpark estimate of the yearly salary, and then add whatever you think the benefits might be worth. (Ie. 401k 6% match, HSA employer contribution, etc)

Then convert the result back to the hourly rate.

If someone is just changing to hourly I usually advise a conversion of salary + benefits as others suggested. If it is trimming/shaping the role, especially to more impact, rate needs to go up to reflect the higher value per unit hour. Double is a good proxy if you are doing what you are best at, getting rid of a lot of the busy/crap work. Can be bigger jump if the work carved out to be in scope is very high value.

@doodle jump google To estimate an hourly rate from a salary, start by dividing the salary by annual work hours (about 2,000). Then add extra to cover benefits, taxes, and self-employment costsusually 20-30% more. So if the salary was $60K, a rough freelance rate might be around $36-$40/hour.

Not sure if this would be true for your wife's case or not, but when my wife worked contract she had to pay extra self-employment tax - I believe about 15%. So at a minimum just to break even, not counting loss of benefits you need to cover the extra 15% in taxes.

Also no paid holidays - usually about 10 days per year. And no paid vacation, another 10-20 days per year. 25 days a year works out to around 11% loss.

If she had a 401k with company match - typically 3% to 6%, that's another loss to consider.

So all together, just to break even you need a rate that is equivalent to about a 30% to 35% increase over the salary rate (salary / 2080 hrs per yr).

And that doesn't consider other benefits - like medical insurance etc. My wife never used her company insurance because we were always on my employer's insurance plan.

Thanks so much for y'all's help, this is very valuable info!