Employee Cost Per Hour Calculator: Fully-Loaded Hourly Cost
Work out the fully-loaded cost per hour of an employee — the true number employers should know before pricing services, quoting projects, or deciding whether to hire versus outsource.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Fully-loaded cost per hour |
|---|---|
| $104k / 2,080 hours ($50/hr) | $50.00 |
| $104k / 1,600 billable hours | $65.00 |
| $65k / 2,080 hours | $31.25 |
| $200k / 1,800 hours (senior) | $111.11 |
How This Calculator Works
Enter the total annual employee cost (salary + payroll tax + benefits + equipment + software + office + training) and the hours worked per year. The calculator divides one by the other to give the fully-loaded hourly cost. For service-business pricing, use billable hours (not total paid hours) as the denominator.
The Formula
Cost per Unit
Total Amount is the full cost or price, Quantity is the number of units it covers
Worked Example
A $104,000 fully-loaded annual cost (an $80,000 salary plus ~30% in payroll tax, benefits, and overhead) across 2,080 hours is $50/hour. But if only 1,600 hours are actually billable (after PTO, holidays, training, and admin), the cost-recovery rate jumps to $65/hour — the rate the business must bill just to break even on that employee.
Key Insight
The gap between an employee's wage and their fully-loaded cost is where service-business pricing goes wrong. An $80,000 salary feels like ~$38/hour (at 2,080 hours), but the fully-loaded cost is closer to $50/hour, and the break-even billing rate against actual billable hours is $65/hour — before any profit margin. Service businesses that price off the wage rather than the fully-loaded, billable-hour cost systematically underprice and erode margin. The standard markup on fully-loaded cost for a profitable service business is 1.5x to 3x.
Frequently Asked Questions
How is fully-loaded cost per hour calculated?
Divide total annual employee cost by hours worked. $104,000 across 2,080 hours is $50/hour. For service pricing, use billable hours (often 1,600 to 1,800) instead of total paid hours.
What goes into fully-loaded cost?
Salary + employer payroll tax (7.65% FICA + FUTA) + benefits (health, retirement match) + equipment + software licenses + office space allocation + training + recruiting amortization. Total typically 1.25x to 1.5x base salary; higher in benefit-rich or equipment-heavy roles.
Why use billable hours, not total hours?
Total paid hours (2,080) overstate productive capacity. PTO, holidays, training, meetings, and admin reduce actual billable time to ~1,600 to 1,800 hours. Pricing against 2,080 when only 1,700 are billable leaves you recovering cost on phantom hours — a common service-business margin leak.
What markup should a service business apply?
Bill at 1.5x to 3x the fully-loaded cost per billable hour, depending on the industry and value delivered. A $65/hour fully-loaded cost might bill at $100 to $195/hour. The markup covers non-billable overhead (sales, management, idle time) and profit.
How does this inform hire-vs-outsource?
Compare the fully-loaded hourly cost of an employee against a contractor or agency rate. Contractors cost more per hour but carry no benefits, equipment, or idle-time cost — for intermittent work, the higher hourly rate often beats a full-time hire's fully-loaded cost on under-utilized hours.
Related Calculators
Methodology & Review
Fully-loaded cost per hour is total annual employee cost divided by hours worked per year. Total cost should include salary, payroll tax, benefits, equipment, software, office space allocation, and training — typically 1.25x to 1.5x base salary. Billable hours (not total paid hours) is the right denominator for service-business pricing.
Written by Ugo Candido · Last updated May 17, 2026.