What multiple of salary should I budget for a hire?

Between 1.25 and 1.4 times base is a common range in the US and UK once taxes, benefits and equipment are counted. In high-social-charge European jurisdictions it can exceed 1.6. Use your own inputs rather than the rule of thumb — the variation between countries is larger than the rule.

Why divide by working days rather than 365?

Because nobody works 365 days. Once weekends, holiday and public holidays come out, roughly 226 days remain. Pricing an internal project on a 365-day divisor understates the real cost of the time by around 38%.

Should recruiting cost be spread or charged in year one?

Both views are useful, which is why the calculator shows each. Spreading it across expected tenure gives a fair run-rate for ongoing budgeting; the first-year figure charges it in full, which is what actually leaves the bank account.

Does anything I type get sent anywhere?

No. The whole calculation runs in your browser. Nothing is transmitted, stored, or logged, and there is no account to create.

True Cost of an Employee

What a hire actually costs once tax, benefits, ramp and recruiting are counted.

Replaces: Cost modelling locked inside paid HR and PEO platforms

How to use it

Enter the salary you are considering offering, then the things that come with it — taxes, benefits, equipment, recruiting, and how long before the person is fully productive. The result is what the hire costs your business, expressed annually, per working day, and per productive hour.

Where the number comes from

Cash pay is base plus target bonus. Employer taxes are charged on that total, since most jurisdictions tax bonus alongside salary.
Pension is calculated on base only, which matches how most matching schemes are written.
Benefits, equipment and workspace are added as stated annual amounts rather than percentages, because they rarely scale with salary.
Recruiting is spread across expected tenure — a 15,000 fee over three years is 5,000 a year, not a one-off.
Ramp loss is the fraction of the year spent ramping, times the run-rate cost, times the share of output not being produced. It appears in the first-year figure only.
Working days start from 260 — the weekdays in a year — less paid time off and public holidays. Cost per hour then divides by productive hours, not hours present.

What goes wrong

The part most calculators leave out.

Employer tax rates vary enormously by country and by salary band. The 12% default is a middling blend; US employers on FICA alone are nearer 7.65%, while parts of Europe exceed 30%. Getting this wrong moves the answer by more than any other input.
Many social charges are capped above a threshold, so a high salary attracts a lower effective percentage than a low one. A flat rate overstates the cost of senior hires and understates junior ones.
Expected tenure is a guess, and it is the input people flatter most. Assuming four years when your actual average is eighteen months understates the true cost substantially.
Ramp productivity is judgement, not measurement. For complex enterprise sales roles the real figure is often lower and longer than anyone budgets for.
Management time is not counted here. A new hire consumes their manager’s attention for months, and that manager’s cost per hour is usually higher than the new hire’s.
This is a cost model, not an employment law or payroll tax calculator. Actual liabilities depend on jurisdiction, employment type and thresholds — check with a payroll adviser before relying on the figures.

The 90,000 hire that costs 171,000 in year one

A 90,000 salary with a 10% bonus attracts employer taxes on the full 99,000, a 4% pension on base, 9,000 of benefits, 3,600 of equipment and licences, and 4,800 of workspace. That is a run rate of 131,880 before anyone has been recruited. Spread a 15,000 agency fee across three years of expected tenure and the ongoing cost settles at 136,880 — a little over 1.5 times the salary. The first year is heavier still: the fee lands in full, and four months at 45% productivity costs a further 24,000, taking it past 171,000. The salary line in the budget says 90,000. That gap of more than 80,000 is why headcount plans built on salary come in over budget every single time.

Questions

What multiple of salary should I budget for a hire?: Between 1.25 and 1.4 times base is a common range in the US and UK once taxes, benefits and equipment are counted. In high-social-charge European jurisdictions it can exceed 1.6. Use your own inputs rather than the rule of thumb — the variation between countries is larger than the rule.
Why divide by working days rather than 365?: Because nobody works 365 days. Once weekends, holiday and public holidays come out, roughly 226 days remain. Pricing an internal project on a 365-day divisor understates the real cost of the time by around 38%.
Should recruiting cost be spread or charged in year one?: Both views are useful, which is why the calculator shows each. Spreading it across expected tenure gives a fair run-rate for ongoing budgeting; the first-year figure charges it in full, which is what actually leaves the bank account.
Does anything I type get sent anywhere?: No. The whole calculation runs in your browser. Nothing is transmitted, stored, or logged, and there is no account to create.

Last updated 15 August 2026.

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