ContractingRates
Contractor Day Rate vs Permanent Salary: What You Really Earn
SalariQ Editorial · 14 June 2026 · 6 min read
A recruiter dangles “$900 a day” and your current salary suddenly feels small. But a day rate and a salary aren’t the same currency — and comparing the headlines is how contractors end up effectively worse off.
What the day rate has to cover
A permanent salary quietly includes a lot that a day rate doesn’t. Strip these out before you compare:
- Superannuation — 12% you’d get on top as an employee; as a contractor it comes out of the rate.
- Leave — annual and sick leave you’re not paid for. You only earn on days you actually bill.
- Downtime — the gaps between contracts. Few contractors bill all 52 weeks.
- No safety net — no notice period, no paid public holidays, your own insurance and admin.
A rough rule of thumb
Once you account for billable days (often ~220 a year, not 260), add super and a buffer for risk and downtime, a day rate needs to be meaningfully higher than the daily slice of a salary just to break even. The headline gap is usually smaller than it looks.
Compare them properly in seconds
Don’t do this maths on a napkin. The SalariQ rate converter turns a salary into a balanced day rate and back — super, leave, downtime and buffer worked out for the Australian market — so you can see the real like-for-like number before you decide.
Contracting can pay more — but only once the rate covers what a salary quietly gave you for free.
Frequently asked questions
How do I convert a salary to a contractor day rate in Australia?
Start from the salary, add the 12% superannuation an employer would pay on top, then divide by realistic billable days — often around 220 a year rather than 260 — and add a buffer for downtime and the absence of paid leave.
Is contracting better paid than permanent work in Australia?
Only once the rate covers what a salary quietly included: superannuation, annual and sick leave, public holidays, notice and the gaps between contracts. Headline day rates usually overstate the real gap.
How many billable days are in a contracting year?
Around 220 for most contractors, not the 260 working days in a calendar year. Leave, public holidays and time between contracts account for the difference.
Do contractors get superannuation in Australia?
Generally it comes out of the rate rather than being paid on top, so a day rate has to fund it. This is one of the largest single reasons a headline rate flatters itself against a salary.
Is $900 a day a good contract rate in Australia?
At around 220 billable days that is roughly $198,000 gross, but super, unpaid leave and downtime all come out of it. Convert it to a salary-equivalent figure before comparing it to any permanent offer.
