Employee Cost Calculator Formula
Understand the math behind the employee cost calculator. Each variable explained with a worked example.
Formulas Used
Annual Benefits Cost
benefits_cost = salary * benefits_pct / 100Total Annual Cost
total_cost = salary + (salary * benefits_pct / 100) + taxesMonthly Cost
monthly_cost = (salary + (salary * benefits_pct / 100) + taxes) / 12Burden Rate (% above salary)
burden_rate = salary > 0 ? ((salary * benefits_pct / 100 + taxes) / salary) * 100 : 0Variables
| Variable | Description | Default |
|---|---|---|
salary | Annual Salary(USD) | 65000 |
benefits_pct | Benefits Cost(% of salary) | 25 |
taxes | Employer Payroll Taxes(USD) | 5000 |
How It Works
How to Calculate Total Employee Cost
Formula
Total Cost = Salary + (Salary x Benefits%/100) + Payroll Taxes
The true cost of an employee is typically 25-40% above their base salary. This "burden rate" includes health insurance, retirement contributions, payroll taxes, workers comp, and other benefits.
Worked Example
An employee with a $65,000 salary, 25% benefits cost, and $5,000 in employer payroll taxes.
salary = 65000benefits_pct = 25taxes = 5000
- 01Benefits cost = $65,000 x 25% = $16,250
- 02Total annual cost = $65,000 + $16,250 + $5,000 = $86,250
- 03Monthly cost = $86,250 / 12 = $7,187.50
- 04Burden rate = ($16,250 + $5,000) / $65,000 x 100 = 32.69%
Ready to run the numbers?
Open Employee Cost Calculator