Convert a fully loaded employee cost into the true hourly cost of their productive time.
Salary is roughly three quarters of the real cost, and only about three quarters of paid time is productive. Those two factors compound, so the cost per productive hour is typically over twice the naive salary-divided-by-2080 figure. Agencies and consultancies that price against salary rather than cost per productive hour systematically underprice, and the gap only shows up at year end.
Hourly Employee Cost
Cost per productive hour = fully loaded cost ÷ (paid hours × productive share)
Cost per productive hour = fully loaded cost ÷ (paid hours × productive share) Salary is roughly three quarters of the real cost, and only about three quarters of paid time is productive. Those two factors compound, so the cost per productive hour is typically over twice the naive salary-divided-by-2080 figure.
Agencies and consultancies that price against salary rather than cost per productive hour systematically underprice, and the gap only shows up at year end.
This calculator takes 5 inputs: Gross annual salary, Employer taxes, pension and benefits, Paid leave and public holidays, Contracted hours per day, Share of paid time that is productive. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.