Calculate wage percentage, wage budget, and raise amounts from revenue, current pay, and target pay rates for monthly or annual periods.
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Wage Percentage Formula
The calculator runs three related formulas, one per tab.
Wage % = (Wages + Payroll add-ons) / Revenue * 100
Wage Budget = Revenue * (Target Wage % / 100)
Raise % = (New Pay - Current Pay) / Current Pay * 100
- Wages: gross pay to employees for the period.
- Payroll add-ons: payroll taxes, benefits, and contractor labor for the same period.
- Revenue: gross sales for the same period as the wages.
- Target Wage %: the labor cost share you want to hit.
- Current Pay and New Pay: pay rates for the same period (hourly, weekly, monthly, annual).
Match the periods. If wages are monthly, revenue must be monthly. The calculator does not pro-rate values across periods. Payroll add-ons are optional. Leave them blank if you only want a wage-only ratio. The raise tab converts pay between hourly, weekly, bi-weekly, semi-monthly, monthly, and annual using a 52-week year and your entered weekly hours.
The Wage % tab tells you what share of revenue is going to labor. The Wage budget tab inverts that: pick a target percentage and it returns the dollar ceiling for payroll. The Raise % tab handles three input types (a percentage raise, a flat dollar raise, or a new pay rate) and reports the raise size, new pay, and annual impact.
Benchmark and Reference Tables
Typical wage-to-revenue ranges by industry:
| Industry | Typical Wage % | Notes |
|---|---|---|
| Retail | 10%–20% | Lower for high-volume formats. |
| Restaurant / food service | 25%–35% | Full service trends higher than QSR. |
| Construction | 20%–40% | Varies with materials cost share. |
| Professional services | 20%–35% | Labor is the main cost driver. |
| Software / SaaS | 15%–30% | Excludes R&D-heavy startup phases. |
| Manufacturing | 15%–30% | Highly automated lines run lower. |
Common annual raise sizes:
| Raise Type | Range |
|---|---|
| Cost-of-living adjustment | 2%–3% |
| Standard merit raise | 3%–5% |
| Strong performance | 5%–7% |
| Promotion | 8%–15% |
| Job change | 10%–20%+ |
Examples and FAQ
Example 1: Wage percentage. A cafe pulls $50,000 in monthly revenue. Wages are $12,500 and payroll taxes plus benefits add $1,800. Total labor is $14,300. Wage % = 14,300 / 50,000 × 100 = 28.6%. That sits inside the 25%–35% restaurant range.
Example 2: Wage budget. Same $50,000 in monthly revenue with a 30% target. Maximum wage expense = 50,000 × 0.30 = $15,000. If current wages are $17,000, you are $2,000 over the target.
Example 3: Raise %. Current pay is $20/hour. The offer is $21/hour. Raise % = (21 − 20) / 20 × 100 = 5%. At 40 hours per week, the annual increase is $2,080.
Should I include payroll taxes and benefits? Include them if you want a true labor cost ratio. Leave them out if you only want a wage-only figure. Be consistent across periods you compare.
What counts as revenue? Use gross sales before taxes for the same period as your wages. Do not subtract cost of goods.
Why is my wage percentage above the benchmark? Common causes are overstaffing during slow hours, low pricing, high overtime, or seasonal revenue dips. Check schedules and average ticket size before cutting pay.
Is a 3% raise good? It matches a typical cost-of-living adjustment but does not reward performance. A merit raise usually runs 3%–5%, and promotions run higher.
How do I convert hourly to annual? Multiply the hourly rate by weekly hours, then by 52. The raise tab does this automatically and shows every period side by side.