So if your contracting rate is 2x your FTE salary, and the company has offered you to be converted full time at 1x FTE salary, should you do it? It is true that the employer will now pay for things on your behalf like health insurance, paid time off, taxes, etc., but I find it unlikely that all of those things add up to the wages you are giving up.
and a key point regarding the two: contract/freelance rates are higher because there's no commitment from the employer regarding a stable stream of future work. also they're short term, so the actual gross difference is typically quite small.
where there's a general expectation that a w-2 earner will be budgeted for years into the future.
Yep. If you're hustling and pretty good at sales, a 60-70% utilization would be a good year. So, right off the bat, you can see you need to be making a lot more money per billable day than you would with an FTE salary: at 50% utilization, you need more than 2x just to be in the black (after tax and benefits overhead).
A 2x hourly rate (on a contract basis) only nets out to ~1x FTE over a typical year. (I'm speaking generally of course).
The 2x doesn't come for free nor is it just for PTO & health - it's paying for all the non billable time generally spent marketing, prospecting, qualifying leads, creating proposals, paying for time to proposals that never result in paid work, etc.
A typical independent consultant or freelancer only does billable work 50% of the time.
To answer your question as to "should you?" - it depends on your goals. Contracting versus standard employment is not just a financial, but a lifestyle decision.
