True Employee Cost Calculator
Calculate the true cost of hiring an employee including payroll taxes, benefits, and overhead.
Total employer cost is typically 1.25x to 1.4x base salary.
Changing your currency elsewhere on the site will not affect this page.
The true cost of an employee is always significantly higher than their base salary. When employers budget only for salary, they routinely underestimate labor costs by 20–40%, leading to cash flow problems and incorrect pricing. This calculator shows the full picture.
Formula: Total Employee Cost = Base Salary + Payroll Taxes + Benefits + Overhead + Training Cost Multiplier = Total Employee Cost ÷ Base Salary
Typical cost components (US employer):
| Component | Typical % of Salary |
|---|---|
| Base salary | 100% |
| Social Security (employer share) | 6.2% |
| Medicare (employer share) | 1.45% |
| Federal unemployment (FUTA) | 0.6% |
| State unemployment (SUTA) | 1–5% (varies by state) |
| Health insurance (employer share) | 8–15% |
| Dental/vision insurance | 1–2% |
| Retirement plan match (401k) | 2–6% |
| Paid time off (loaded cost) | 5–8% |
| Workers’ compensation insurance | 1–5% |
| Office space + equipment | 5–15% |
| HR, recruiting, onboarding | 2–5% |
| Total multiplier | 125–175% |
Worked example: New hire salary: $60,000/year
| Item | Amount |
|---|---|
| Salary | $60,000 |
| Payroll taxes (7.65%) | $4,590 |
| Health insurance | $7,200 |
| 401k match (4%) | $2,400 |
| PTO (3 weeks, loaded) | $3,462 |
| Workers’ comp (2%) | $1,200 |
| Equipment + workspace | $5,000 |
| Total annual cost | $83,852 |
Cost multiplier = $83,852 ÷ $60,000 = 1.40× (40% above salary)
Why this matters for pricing:
Convert the annual figures to an hourly basis before you compare them to a billing rate, because that is where most of these mistakes happen.
A $60,000 salary is $28.85/hour across the standard 2,080-hour year. The $83,852 true cost is $40.31/hour. Bill that person out at $75/hour and the gross margin is 46%, not the 160% you would calculate against their wage. Take out the hours they are not billing (meetings, admin, training, holiday) and the real margin is thinner still, which is why professional-services firms target a billing rate of two to three times the wage rather than a percentage over it.
Remote work impact: Remote employees typically reduce overhead costs by $3,000–$10,000/year per employee (no office space, utilities, or equipment for common areas).
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
SuperGlobalCalculator is independently built and maintained. See how we build and verify our calculators.
More Business Calculators
- Vending Machine Revenue Calculator
- Warehouse Space Calculator
- Takt Time Calculator
- EOQ Calculator (Economic Order Quantity)
- Days Inventory Outstanding (DIO) Calculator
- Days Payable Outstanding (DPO) Calculator
- Days Sales Outstanding (DSO) Calculator
- Dimensional Weight Calculator
- Startup Valuation Calculator
- Revenue Per Employee Calculator
- Average Contract Value (ACV) Calculator