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Employee Cost per Hour

Price the true hourly cost of an employee with burden.

About Employee Cost per Hour

An employee genuinely costs salary plus benefits, payroll taxes and allocated overhead, and dividing that total by working hours reveals the true hourly rate. Pricing services below fully loaded hourly cost quietly subsidizes clients, so burdened rates are what quotes and budgets must be compared against.

Formula

Employee Cost per Hour

Hourly cost = salary x (1 + burden%) / hours

burden
Benefits, payroll taxes and overhead on the salary

Worked example

With the default values below, Employee Cost per Hour returns Total Burden on Salary of 41.00%. Change any input above and every figure here is recalculated in your browser.

Inputs used

Annual salaryminimum 0
60,000
Benefitsaccepts 0–100 %
18 %
Payroll taxesaccepts 0–30 %
8 %
Allocated overheadaccepts 0–200 %
15 %
Work hours per yearminimum 1
2,080

Results

Total Burden on Salary
41.00%
Annual Fully Loaded Cost
$84,600.00
Fully Loaded Cost per Hour
$40.67

Step by step

  1. 1Values used
  2. 2Employee Cost per Hour
  3. 3Total Burden on Salary= 41.00
  4. 4Annual Fully Loaded Cost= 84,600.00
  5. 5Fully Loaded Cost per Hour= 40.67

Assumptions and limits

  • The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or fees or charges into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Employee Cost per Hour calculated?

Hourly cost = salary x (1 + burden%) / hours An employee genuinely costs salary plus benefits, payroll taxes and allocated overhead, and dividing that total by working hours reveals the true hourly rate.

Why does Employee Cost per Hour matter?

Pricing services below fully loaded hourly cost quietly subsidizes clients, so burdened rates are what quotes and budgets must be compared against.

What values do I need to enter?

This calculator takes 5 inputs: Annual salary, Benefits, Payroll taxes, Allocated overhead, Work hours per year. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.

Related Calculators

Employee Cost per Hour – Calculate Total Burden on Salary