Table of Contents
98
6 min
24.07.2026
How Much of Your Revenue Can Go to Salaries
Olena Smolikova
Financial expert at Finmap
The team grows little by little. You hired another manager, bumped up the pay of a strong specialist, brought on an assistant because you were falling behind. Each decision on its own looked smart. Then you look at the month's bottom line — revenue is fine, but there's almost no profit, and it's not clear where it went.
More often than not, it went into payroll. Salaries creep up unnoticed: one person here, one raise there. And at some point the business starts working mostly to pay the team, not the owner.
The question of how much you can spend on salaries is one of the biggest in any people-driven business. And the answer needs to be a number, not a gut feeling of "we seem to be managing."
Why the payroll bill grows unnoticed
No single hiring decision looks dangerous. What's dangerous is the sum of all those decisions — the one number nobody keeps in front of their eyes.
| Each decision on its own | What you see in the bottom line |
|---|---|
| "Let's hire one more — we can't keep up" | Revenue didn't grow as fast as the wage bill |
| "I raised their pay so they wouldn't leave" | Raise one person and six months later the others ask too |
| "It's an investment in the team" | An investment with no payback math is just an expense |
Until payroll is counted as a share of revenue, every new hire feels like a trifle. Together, though, they quietly eat your margin.
"I didn't notice when I started working for my team's salaries. One month I just realized I'd paid everyone — and myself last. Even though revenue was a record high."
How much is normal
There's no universal "correct" payroll figure — it differs by type of business. But there are benchmarks you can start from:
| Type of business | Payroll benchmark as a share of revenue |
|---|---|
| Trade, retail | Lower: the main cost is the cost of goods |
| Services, agencies, IT | Higher: people are the main resource and the main cost |
| Manufacturing | In between: split between materials and people |
The point isn't to memorize the "right" percentage, but to know your own and watch which way it's heading. If payroll creeps up year after year while profit fails to keep pace, that's a warning sign — even if the absolute numbers still look fine.
How to count your payroll properly
For the figure to be honest, payroll has to include more than just take-home pay:
- All payments to the team — base rates, commissions, bonuses, premiums.
- Taxes and payroll contributions on wages — this too is the cost of a person to the business, not a separate trifle.
- Your own draw, if you work in the business rather than just own it.
- Contractors on recurring tasks — if someone is effectively part of the team, their pay is part of payroll too.
Add this up and divide by revenue for the same period. That gives you your real percentage. Compare it with previous months — it's the trend, not a single number, that shows whether things are under control.
"When I counted payroll together with taxes and my own draw, the percentage turned out to be one and a half times higher than I'd thought. After that, hiring decisions got a lot calmer."
What to do if it's too high
A high payroll isn't always a reason to let someone go. More often it's a reason to look closely at why people aren't delivering a proportional return:
- Tie pay to results where it's now a flat rate with no link to revenue.
- Look at workload. Sometimes two half-loaded people cost as much as three you actually need.
- Don't raise everyone "so nobody feels slighted." A raise is a decision about a specific person and a specific contribution.
- Pay yourself first. If the owner pays themselves last, payroll will always look "normal" — at the expense of your own underpayment.
Why bookkeeping and a financier come in here
To see payroll as a share of revenue rather than a stack of separate pay slips, salaries, the taxes on them, and revenue all need to come together in one place. Then the percentage calculates itself, and its growth shows up in advance rather than after the fact.
In Finmap you can move team payments into a separate category and see your payroll alongside revenue month over month — so the question of "how much can we pay" stops being guesswork.
📌 Find out how much your revenue can really carry in salaries. Try Finmap free for 14 days: put team payments into a separate category — and you'll see payroll as a share of revenue before it eats your profit.
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Frequently asked questions
What percentage of revenue on salaries is considered normal?
There's no single figure: in retail, payroll is usually lower (the main cost is the cost of goods), while in services and IT it's higher (people are the product). What matters more than the percentage itself is its trend: if payroll grows faster than revenue, that's a warning sign, whatever the absolute level.
Should I count my own salary in payroll?
Yes, if you work in the business rather than just own it. Otherwise payroll will look smaller than it is, at the expense of your own underpayment, and hiring decisions will rest on the wrong numbers.
What about contractors and freelancers?
Those who are effectively part of the team and handle recurring tasks — yes. A one-off contractor for a specific project — no, that's more the cost of the project than ongoing payroll.
Payroll is high, but everyone's needed — what do I do?
First check whether pay is tied to results and whether everyone is fully loaded. Often the problem isn't the number of people but that rates don't depend on revenue. Letting someone go is a last resort — and it too is a decision based on the numbers.
How often should I recalculate this percentage?
Once a month, along with the rest of your monthly review. That way you'll see the trend and have time to react before payroll eats your profit, not after.
Any questions left?
We are ready to answer them.
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