Staff cost calculator
Work out what a new hire costs each week and each year, including employer costs, and how much extra you need to sell to cover it. The calculation uses only the figures you enter.
Before you hire, see what the job will cost and what it needs to bring in. This free staff cost calculator works out the weekly wages, the weekly and yearly cost once employer costs are added, and the extra sales a week needed to cover it at your gross margin.
The calculation uses only the figures you type. It does not read payroll records, and nothing you enter is saved.
How to use this calculator
- Enter Hourly wage: the rate you plan to pay.
- Enter Hours per week: the hours the job is likely to need, from 0 to 168.
- Enter Employer costs, % of wages: what you pay on top of wages, such as employer payroll taxes, pension or retirement contributions, insurance and paid holiday, as a percentage of wages.
- Enter Gross margin, %: the share of each sale left after the cost of the goods. The margin and markup calculator can work it out.
- Select Calculate. To load the sample figures first, select Use example.
Formula and worked staff cost example
Weekly wages = hourly wage × hours per week
Weekly cost = weekly wages × (1 + employer costs %)
Yearly cost = weekly cost × 52
Extra weekly sales to cover the cost = weekly cost ÷ gross margin %
Here are the sample values loaded by the Use example button:
| Input | Sample value |
|---|---|
| Hourly wage | $17 |
| Hours per week | 20 |
| Employer costs, % of wages | 12% |
| Gross margin, % | 40% |
Twenty hours at $17 is $340 in weekly wages. Adding 12% employer costs gives $380.80 a week, or $19,801.60 over 52 weeks. At a 40% gross margin, each $1 of sales leaves 40 cents, so the shop needs $380.80 ÷ 0.40 = $952 of extra sales a week to cover the new hire.
Before you rely on the numbers
- Check your employer costs. Payroll taxes, pension contributions and insurance depend on where you are and on the person. In the United States, the IRS explains employment taxes; in the UK, GOV.UK covers employing staff.
- Count the time it saves. A new hire may free the owner for work that brings in sales, or let the shop open longer. The extra sales figure is a break-even target, not a forecast.
- Plan the hours. Try the shifts in the staff rota builder, then write the job ad with the job ad and hiring sign maker.
Frequently asked questions
What counts as employer costs?
Anything you pay because you employ the person, on top of their wage: employer payroll taxes, pension or retirement contributions, workers' compensation or other insurance, and paid holiday. Enter the total as a percentage of wages.
Why divide by the gross margin?
Only the margin on each sale is left to pay for wages. At a 40% margin, $100 of sales leaves $40, so covering $380.80 of cost needs $952 of sales.
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