Employee Cost Calculator: True Cost and ROI of a Hire

Usually 20% to 45% more than salary, depending on benefits. A $60,000 employee costs about $72,000 to $87,000 a year all in. Payroll taxes are about 8% to 10%. Health insurance, retirement contributions, paid time off and workers' compensation make up the rest.

Full cost = salary × (1 + taxes and benefits rate) + one-time costs. In the example: $60,000 × 1.30 is $78,000 a year, plus $5,000 to recruit. Add equipment, software seats and desk space to the rate if you want them included. The result is the cost before you count anything the person brings in.

Divide the full yearly cost by hours worked. Full-time work is about 2,080 hours a year (40 hours × 52 weeks). In the example, $78,000 ÷ 2,080 is $37.50 an hour. To count only productive hours, subtract vacation, holidays and sick days first. At 1,880 hours, the same person costs about $41.50 an hour.

In the US, employers pay 6.2% Social Security tax (up to the yearly wage base) and 1.45% Medicare tax, for 7.65% in all. Federal unemployment tax (FUTA) is usually $42 per employee a year after state credits. State unemployment tax and workers' compensation vary by state and industry. Check current rates with your payroll provider.

Recruiting often costs a few thousand dollars for hourly roles and $5,000 to $25,000 or more for skilled roles, counting job ads, recruiter fees, interview time, background checks and onboarding. Recruiter fees alone often run 15% to 25% of first-year salary. Enter your one-time costs under More options.

It's the full cost divided by salary. A multiplier of 1.25 to 1.4 is common for full-time staff with benefits. The example's is 1.30. Some firms use 1.5 to 2 to also cover rent, equipment and management time.

Estimate the gross profit the person will bring in a year once fully productive: sales they'll close, work you'll stop outsourcing, or hours they free for revenue work. Compare it with their full cost. In the example, $120,000 against $78,000 pays back in month 9. If the value only just covers the cost, the hire is risky.

Often 3 to 6 months for most roles, and 6 to 12 months or more for complex sales, technical or management roles. We ramp value up evenly over the months you enter. Set it from your past hires if you can.

Contractors usually cost more per hour but carry no payroll taxes, benefits or recruiting costs, and you pay only for the hours you need. Employees cost less per hour for steady full-time work. Compare a contractor's hourly rate with this calculator's full cost an hour. Worker classification rules are strict, so check them before you choose.

Health, dental and vision insurance, retirement contributions such as a 401(k) match, paid vacation, holidays and sick leave, life and disability insurance, and perks such as training budgets or phone allowances. Add up what you pay a year and divide by salary to get your rate.