Enter salary, overhead and working hours to find the true fully-loaded hourly cost of an employee.
An employee costs more per hour than their wage. Add benefits and overhead to the salary, then divide by the hours worked in a year. A $50,000 salary plus $15,000 of overhead over 2,080 hours is about $31.25 an hour fully loaded, versus roughly $24 for the wage alone. Use it to price work accurately.
Fully-loaded hourly cost
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What Is an Employee Hourly Cost?
An employee costs more per hour than their wage suggests. Once you add taxes, benefits, equipment, software and a share of overhead, the fully-loaded cost is often well above the base rate. This number is essential for pricing work and quoting projects so you do not lose money on your own time.
How to Calculate the Hourly Cost
Hourly cost = (Salary + Overhead) / Working hours per yearA $50,000 salary with $15,000 of overhead is $65,000 a year. Over 2,080 working hours, that is about $31.25 an hour fully loaded, versus roughly $24.04 for the wage alone. The calculator separates the base and overhead portions so you can see where the cost comes from.
How to Read Your Result
The main figure is the true hourly cost to employ someone. The base and overhead boxes split that into wage and everything else, and the total annual cost confirms the yearly figure. Use the hourly cost as your floor, then add a margin to reach a billing rate.
More detail
What to Include in Overhead
Common items are payroll taxes, health and retirement benefits, paid time off, equipment, software licences, workspace and a share of management time. The more completely you capture these, the more accurate your hourly cost.
To turn this cost into a rate you can charge, add a margin with the markup calculator, or set an independent figure with the freelance rate calculator.
Working Hours and Utilisation
The 2,080-hour default is 40 hours for 52 weeks. If you spread cost only over billable hours, subtract holidays, admin and downtime, which raises the hourly figure. To compare this cost against an advertised wage, use the salary calculator.
What should working hours per year be?
A common baseline is 2,080 hours, which is 40 hours a week for 52 weeks. Subtract paid holidays and typical time off if you want the cost spread only over hours actually worked, which raises the hourly figure.
What counts as overhead?
Everything beyond base salary that the employee costs you: payroll taxes, benefits, paid leave, equipment, software, workspace and a share of general overhead.
Is this the same as a billing rate?
No. This is your cost. A billing rate adds a margin on top so the work is profitable. Use the margin or markup calculator to add that margin.
Why is the loaded cost so much higher than the wage?
Because benefits, taxes, equipment and overhead often add 25 to 40 percent or more on top of salary. That gap is exactly why quoting from the wage alone loses money.
Is my data saved?
No. The calculation runs in your browser and nothing you enter is stored.
Sources
- Understanding overhead (Corporate Finance Institute).
- What is cost? (Corporate Finance Institute).
- Managing small-business finances (U.S. Small Business Administration).
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The formula and worked example on this page are checked for accuracy against standard references. View profile
This calculator is for general information and planning only and is not financial, tax, accounting or legal advice. Results are estimates based on the figures you enter. Confirm important decisions with a qualified professional. Spotted an error? Let us know.
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