I think 2.5x is way too much. The rule I've seen is XX,000/year as salary is roughly equivalent to XX/hour as a contractor. Here are the details on some of the

I think 2.5x is way too much. The rule I've seen is XX,000/year as salary is roughly equivalent to XX/hour as a contractor. Here are the details on some of the mentioned items: PTO: if you get 3 weeks out of 52 paid, then account for 6% more to cover that Taxes: Employer portion of payroll taxes (let's say 8% in US) and B&O taxes that your state will likely want (1-1.5% of revenue) Downtime: If it takes 2-3 months/year between projects, add 30% to your rate to cover that. Some may see this as a bonus time to recharge, but you are still likely be working on business development and marketing at least for a bit. Licensing and Business registration: depends on your local requirements. In my city it's $300/year for both. This presumes you register an LLC and not just have a sole proprietorship. Medical insurance: You can get an inexpensive bronze plan or high deductible plan directly from insurers (this comes with HSA you can contribute to) or get coverage from your partner (if available). I used to be paying around $400 for a bronze plan. Umbrella insurance: Not too expensive, but may require coverage raised on your auto and homeowners insurance. Let's say $100/month, although I'd advise having it anyway. Parking and auto: depends on whether you work remotely or not; let's say $200/month. Total: 45% on top of your salary rate + $1000/month; if you are comparing with 100k salary, then you'll need 60% more to cover additional expenses. Note that most of these expenses can be expensed, so they will be subtracted from your before tax income, thus reducing your taxes. You can also include car-related and home-office related expenses, which will further reduce your taxes. I may be missing something, but it should give you a rough idea on what to expect. This is all based on personal experience.