Free Employee Cost Calculator
Calculate the true fully-loaded cost of an agency employee. See how salary, payroll taxes, benefits, overhead, and software add up to your real per-hour cost.
Salary & Taxes
FICA, FUTA, SUTA, workers comp (typically 7-12%)
Benefits & Overhead
Health, dental, retirement match, PTO buyout
Office, equipment, admin, management time
Typical: 1,400-1,700 billable hours per year
True Employee Cost
Fully Loaded Annual Cost
$104,150
1.39x base salary
Monthly
$8,679
Per Billable Hour
$69.43
Rule of thumb: True employee cost is typically 1.25-1.4x base salary. Use fully loaded hourly cost to set billable rates that actually produce margin.
How to Use This Calculator
Start with the base salary you pay or plan to pay. Then add your employer tax rate (typically 7-12% covering FICA, FUTA, SUTA, and workers comp). Benefits usually run 10-20% of salary once you account for health insurance, retirement match, and paid time off. Overhead covers the portion of rent, equipment, admin, and management time attributable to that seat.
The key number is billable hours per year. A full-time employee has roughly 2,080 working hours, but after vacation, holidays, sick days, internal meetings, training, and business development, actual billable hours are closer to 1,400-1,700. Use a realistic number, not the theoretical max, or your loaded rate will understate real cost.
The output shows your total annual cost, monthly cost, and fully-loaded cost per billable hour. That last number is the floor for pricing any engagement this person works on. Bill below it and you're losing money on delivery even before overhead.
What to Do With the Results
- Reset your billable rates. Target 2-3x fully-loaded cost as your standard billable rate. This produces 50-60% gross margin once utilization is factored in.
- Audit project profitability. Compare cost-per-hour to what you're actually realizing on current engagements. Losses are often invisible without this number.
- Price new hires before you make them. Calculate the loaded cost of a prospective hire and model how much additional revenue they need to bring in at your target margin.
- Plan raises and promotions. A 10% salary bump is usually a 12-14% total cost increase once taxes and benefits scale.
Frequently Asked Questions
What is the true cost of an employee?
True cost (also called fully-loaded cost) is the total an employer spends on an employee beyond base salary. It includes payroll taxes (FICA, FUTA, SUTA, workers comp), benefits (health, dental, retirement match, PTO), overhead (office, equipment, management time), and software/tools. For most agencies the true cost is 1.25x to 1.4x base salary.
How do I calculate a fully-loaded hourly rate?
Divide total annual cost by annual billable hours. If an employee costs $105,000 all-in and bills 1,500 hours per year, their fully-loaded cost is $70/hour. Your billable rate must comfortably exceed this to produce margin after account management, rework, and scope creep.
What counts as overhead per employee?
Overhead includes the portion of office/rent attributable to that seat, their share of utilities, equipment refresh (laptop, monitor), admin and finance support, management time, training, and recruitment amortization. A rough benchmark is $10,000-$18,000 per employee per year for mid-size agencies.
Why is my true cost so much higher than salary?
Base salary is typically only 70-80% of total employee cost. Employer payroll taxes add 7-12%. Benefits add another 10-20%. Overhead, tools, and management time add the remaining 10-20%. Ignoring these hidden costs is the fastest way to price projects below actual cost.
Should I use fully-loaded cost when pricing projects?
Yes. Use fully-loaded hourly cost as your floor, not base salary / 2080. Then apply your target gross margin to get a billable rate. For healthy agencies that means billable rate should be 2-3x fully-loaded cost, which produces 50-60% gross margin after realistic utilization.
See where your team time is actually going
AgencyPro tracks utilization, billable realization, and project profitability so you know whether your rates cover true employee cost.