True Cost of Employee Calculator
Enter an employee's base salary along with benefits, payroll tax, and overhead percentages to calculate their true total cost to the business — commonly 1.25 to 1.4 times base salary once everything is included.
How the True Cost of Employee formula works
Salary scaled up by additional cost percentages:
Total cost = Base salary × (1 + Benefits% + Payroll tax% + Overhead%)
Step-by-step calculation
- Add up the percentage costs for benefits, payroll taxes, and overhead (equipment, office space, software, etc.) as a share of salary.
- Add 1 (representing 100% of base salary) to that combined percentage.
- Multiply by base salary to get total true cost.
Worked example
A $70,000 base salary with 25% benefits, 8% payroll tax, and 10% overhead: Total multiplier = 1 + 0.25 + 0.08 + 0.10 = 1.43. Total cost = 70,000 × 1.43 = $100,100.
Frequently asked questions
What's typically included in the 'benefits' percentage?
Health insurance, retirement contributions, paid time off, and other employer-provided benefits — the exact percentage varies significantly by company and country, but 20-30% of base salary is a commonly cited general range.
Why does this matter for hiring decisions?
Budgeting based on base salary alone significantly understates the actual cost of a new hire — using a fully-loaded cost figure gives a more accurate picture for headcount planning and cost comparisons against contractors or automation.