Contract or permanent. How to read the numbers before you decide.
Most engineers compare a day rate to a salary by multiplying the rate by 220 and feeling good about it. The real comparison is less flattering and more useful.
The question comes up at every stage of a career in network and data center work. A contract offers a day rate that looks far higher than any salary on the table. A permanent role offers less on paper and a lot that is not on paper at all.
Both can be the right answer. The mistake is comparing them with the wrong arithmetic. This article walks through the comparison in four steps, with the rules that apply in the US and the UK.
Start with the days you will actually bill.
Two hundred and twenty is the number of working days people use as a shortcut. It is not the number you will invoice. Gaps between contracts, holidays you now pay for yourself, sick days, training days and the weeks a project slips before it starts all come out of it.
Work out your own number instead. A year has about 260 weekdays. From those, take away:
- public holidays where you work;
- the vacation you actually intend to take;
- a realistic allowance for sickness;
- days spent on training and renewing certifications;
- the gaps between contracts, including time spent finding the next one.
The last line is the one people underestimate. Ask contractors you trust how long their gaps ran last year. Then plan a good year and a slow year, and price both.
Add what the salary includes.
A salary is only part of what an employer pays for you. The rest is benefits, and as a contractor you buy them yourself.
In the US, the Bureau of Labor Statistics reported that benefits made up 30.0% of private employers’ compensation costs in June 2026 (BLS, 2026). That covers paid leave, insurance, retirement contributions and legally required payments.
Taxes shift too. An employee on W-2 pays half of Social Security and Medicare, and the employer pays the other half. A self-employed contractor pays both halves. The IRS sets the self-employment tax rate at 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare (IRS).
In the UK, employers pay National Insurance on top of salary. From April 2025 the employer rate rose to 15%, above a threshold of £5,000 a year (GOV.UK, 2024). Employers must also pay at least 3% into a workplace pension for eligible staff (GOV.UK). A full-time employee is entitled to 28 days of paid leave a year (GOV.UK).
On both sides of the Atlantic, add the costs that come with running your own work. Equipment, test gear, insurance, training budgets and the cost of your own accountant all move from the employer to you.
Know which rules you are working under.
How you are engaged changes what you keep.
In the US, a contract can run through an agency on W-2, as a 1099 independent contractor, or through your own company. Each treats tax and benefits differently. Ask which one an offer is before comparing it.
In the UK, the off-payroll working rules, often called IR35, decide whether a contractor working through their own company is taxed like an employee. For medium and large private sector clients, the client decides whether the rules apply to a contract (GOV.UK). If they do, much of the tax advantage of contracting goes. Ask for the status determination before you accept.
None of this is complicated once you know which route you are on. It is easy to miss when the rate is the only number on the offer.
Then price the risk.
Contract work concentrates income in the months you are working and makes the gaps your problem. If you can hold three months of costs in reserve, the volatility is manageable. If you cannot, a lower but steady salary may be the better financial decision even when the rate looks generous.
Think about the shape of the next two years as well. A contract market can turn quickly when a large program finishes or a budget is cut. A permanent role carries its own risks, but notice periods and redundancy rules give you time to react.
Your stage of life matters here. A mortgage application, a new child or a visa can make steady payslips worth more than the arithmetic suggests.
What moves the rate.
In our placements, three things move a contract rate more than years of experience. A certification the client’s standard requires, evidence of enterprise or hyperscale deployments, and willingness to work the shift patterns the project actually needs. The rate calculator on this site shows how each affects the range for your role and market.
The same three things raise your value on the permanent side. Employers pay more for engineers who arrive with the certifications their standards require and evidence they can deliver to them.
Run the comparison.
Put it together in one line for each route. For a contract: the day rate, times your realistic billable days, minus the benefits and taxes you now carry, minus your business costs. For a permanent role: the salary, plus the benefits you would otherwise buy.
Then run the contract line twice. Say you expect 200 billable days in a good year and 170 in a slow one. If the slow-year figure still beats the salary plus benefits, the contract holds up on its own. If only the good year does, you are betting on the market staying busy, and that is worth knowing before you sign.
Neither route is right for everyone. The contract versus permanent tool lets you put your own numbers in and see the crossover. Then decide with the figure in front of you rather than the one in your head.