Employee Cost Calculator
Calculate the true total cost of an employee including salary, benefits, and employer overhead.
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How to use this calculator
Each component is calculated as a percentage of base salary (where applicable) and summed. The cost multiplier shows how many times the base salary the true cost represents.
- 1
Enter the employee annual base salary and the percentage of salary spent on benefits.
- 2
Add payroll tax rate, equipment costs, training budget, and office overhead percentage.
- 3
Read the true total annual cost, cost multiplier, and effective hourly rate.
Frequently asked questions
What is a typical cost multiplier for an employee?
Most employers find the true cost of an employee is 1.25× to 1.4× their base salary when including benefits, payroll taxes, and overhead. Fully-loaded costs including equipment and training can push this to 1.5× or higher.
What employer payroll taxes should I include?
In the US, employer payroll tax includes Social Security (6.2%) and Medicare (1.45%), totaling 7.65% FICA. Additional state unemployment taxes (FUTA/SUTA) apply. Other countries have different employer contribution rates.
Why calculate the effective hourly cost?
The effective hourly rate helps with project costing, client billing rate setting, and comparing the cost of an employee versus a contractor or freelancer who charges an hourly rate.
Employee Cost Calculator — True Total Cost of Hiring
The hidden costs beyond salary
A $60,000 salary rarely costs $60,000. Employers must budget for payroll taxes, health insurance, retirement contributions, paid time off, equipment, software licenses, training, and a share of office overhead. Understanding the full cost helps set accurate budgets and make informed hiring decisions.
Employee vs contractor cost comparison
Contractors appear expensive at their hourly rate, but they do not require benefits, payroll taxes, or overhead. Use this calculator to find your true employee hourly cost, then compare it against contractor rates to understand the real trade-off. For long-term, full-time roles, employees are usually more cost-effective despite higher apparent costs.
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →