Enter the total annual costs of wages and benefits and the total number of employees into the calculator to determine the cost per employee.
Related Calculators
Cost Per Employee Formula
Company average mode divides total annual labor cost by headcount:
Cost Per Employee = (Wages + Benefits + Taxes + Other) / Employees
Single employee mode adds a load factor and any extra annual costs to base pay:
Loaded Cost = Annual Pay × (1 + Load %) + Other Annual Costs
- Wages — gross payroll before taxes and deductions.
- Benefits — health insurance, retirement match, paid leave, and similar.
- Taxes — employer-paid payroll taxes (FICA, FUTA, SUTA, workers’ comp).
- Other — equipment, software seats, training, recruiting, facilities allocation.
- Annual Pay — salary, or hourly wage × hours/week × weeks/year.
- Load % — benefits, taxes, and overhead expressed as a percent of pay.
- Employees — headcount or full-time equivalents (FTEs).
Use FTEs if you have part-time staff. Two half-time workers count as one FTE. The hourly equivalent in the result uses 2,080 hours/year for salaried roles and your entered hours for hourly roles.
Reference Tables
Typical employer load factors in the U.S. private sector. Use these as a sanity check on the load percent you enter.
| Cost Component | Typical % of Wages |
|---|---|
| Payroll taxes (FICA, FUTA, SUTA) | 7.5% – 10% |
| Health and other insurance | 7% – 12% |
| Retirement contributions | 3% – 6% |
| Paid leave | 7% – 9% |
| Total load (typical range) | 20% – 40% |
Sample loaded cost at a 30% load factor:
| Base Pay | Loaded Annual Cost | Loaded Hourly |
|---|---|---|
| $40,000 | $52,000 | $25.00 |
| $60,000 | $78,000 | $37.50 |
| $80,000 | $104,000 | $50.00 |
| $100,000 | $130,000 | $62.50 |
| $150,000 | $195,000 | $93.75 |
Example and FAQ
Example: A 25-person team has $1,750,000 in annual payroll and $525,000 in benefits and taxes. Total cost is $2,275,000. Divide by 25 to get $91,000 cost per employee per year, or about $43.75 per hour worked.
Should I include the owner’s salary? Include it if the owner is paid through payroll and counts in headcount. Exclude profit distributions.
What about contractors? 1099 contractors usually aren’t part of cost per employee. Track them separately since they don’t carry payroll taxes or benefits.
Headcount or FTE? Use FTE when you have part-timers. Headcount overstates the denominator and understates the true cost per full-time worker.
Why is my load percent over 40%? Common causes are rich health plans, high workers’ comp rates, generous retirement matches, or including overhead like office space and software in the same field.
