About

A common pitfall in business planning is equating an employee's cost solely with their gross salary. The "True Cost" of an employee-often called the fully burdened rate-typically ranges from 1.25 to 1.4 times the base salary depending on the jurisdiction. This extra margin covers mandatory payroll taxes, voluntary benefits (healthcare, pension), and allocated overheads (equipment, software licenses).

This tool sums these disparate elements into a unified financial metric. It allows you to select regional presets for tax loads (e.g., US FICA, UK NI) or input custom percentage rates, visualizing the split between direct compensation and operational burden. This data is critical for setting billing rates and project budgets.

Formulas

The Fully Burdened Cost is calculated as:

1. Tax Amount (T):

T = Salary × TaxRate%

2. Total Cost (TC):

TC = Salary + T + Benefits + Overhead

3. Burden Rate (BR):

TCSalary

Reference Data

Cost Component	Typical Range	Description
Base Salary	100%	Gross Pay before deductions
Payroll Taxes (Employer)	8% - 20%	Social Security, Medicare, Unemployment
Insurance & Benefits	5% - 15%	Health, Dental, Life, 401k Match
Equipment & Software	$2k - $5k / yr	Laptop, SaaS Licenses, Furniture
Training & Development	1% - 3%	Courses, Conferences
Facilities/Overhead	Allocated	Rent, Utilities, Admin Support

Frequently Asked Questions

The burden rate is the multiplier applied to the base salary to determine the true cost. If an employee earns $50k and costs the company $70k total, the burden rate is 1.4 (or 40% burden).

The presets provided (e.g., US 7.65%) are based on standard federal statutory requirements. However, state taxes, workers' compensation insurance, and local levies vary significantly. Use the "Custom" fields for exact figures.

Yes. Facilities/Overhead is a catch-all for the cost of providing a workspace. To calculate this, take your total annual rent + utilities and divide by the number of employees.

If you bill clients based on hourly wages without factoring in the full burden, you might be operating at a loss. Knowing the true cost per hour sets the floor for your profitability.