Converting a Salary to an Hourly Rate
The standard conversion divides an annual salary by 2,080 - fifty-two weeks of forty hours. The Salary to Hourly Wage Calculator does it along with daily and monthly figures.
The quick version, and what it assumes
A salary of 52,000 divided by 2,080 is 25 an hour. Clean, and it assumes you work every one of those 2,080 hours.
You do not. A typical employed year includes paid holiday and public holidays - often five to six weeks in total across much of Europe, less in the United States. If you are paid for 2,080 hours but work 1,880 of them, your real rate per hour worked is 27.66, not 25. About ten per cent higher than the simple division suggests.
Which direction you want depends on the question. For comparing two salaried jobs, 2,080 is fine and consistent. For comparing a salary against freelance work, the hours you actually work is the honest figure.
Why a freelance rate must be much higher
This is where the naive conversion does real damage. Someone leaving a 52,000 salary and charging 25 an hour will earn considerably less.
Paid time off disappears. Five weeks of holiday and a fortnight of illness is around seven weeks unpaid - 13 per cent of the year.
Unbillable time appears. Finding clients, quoting, invoicing, admin and accounts. Most freelancers bill somewhere between 50 and 70 per cent of their working hours, and the rest is real work that nobody pays for directly.
Costs move to you. Equipment, software, insurance, workspace, pension contributions an employer was making, and the employer's share of payroll taxes.
Taken together, a freelance rate typically needs to be two to two and a half times the salaried hourly equivalent to produce the same income. The Freelance Hourly Rate Calculator works back from an income goal rather than up from a salary, which is the more reliable direction.
The reverse conversion
Going from hourly to annual, multiply by hours per week and then by the weeks you actually work paid - not by 52 if you are not paid for 52.
For a quick estimate, the old trick is to double the hourly rate and add three zeros: 25 an hour is roughly 50,000 a year. It assumes a 2,000-hour year and is accurate enough for a conversation.
What the figure leaves out
Pension contributions, healthcare, bonuses, equity, training budget and parental leave are part of what a job pays and none of them appear in an hourly rate. Two jobs at identical salaries can differ substantially once those are counted, which is worth listing out rather than comparing one number.
Common questions
Why 2,080 hours?
Fifty-two weeks times forty. It is a convention, not a measurement, and it counts holiday as worked.
Should I use gross or net?
Gross for comparing offers. Net varies with your own tax position and deductions.
How do I compare part-time to full-time?
Convert both to hourly. It is the only basis on which they are comparable.
What about overtime?
If it is paid, add it to the annual figure. If it is unpaid, it lowers your real hourly rate and should be in the hours you divide by.
Want to see your own hourly equivalent?