True Cost of an Employee
A salary is never what an employee costs. Employer contributions, insurance, equipment, a desk, training and the recruitment fee all sit on top of it, and none of them appear on the payslip. This calculator adds them up, then divides the total by the hours you actually get rather than the hours in the contract.
The first half of the sheet is the numerator. Base salary and bonus, the employer-side contribution rate applied to both, then the lines owners usually forget: health cover, perks, a laptop spread over its useful life, per-seat software, a share of rent and utilities, courses, and the agency fee divided by how long the person is likely to stay. In the sample data those extras come to 11,100 a year on a salary of 54,000 — enough to turn the advertised figure into a cost of 82,470, or 1.53 times the salary.
The second half is the denominator, and it is where most hourly rates go wrong. A 40-hour contract over 52 weeks looks like 2,080 hours. Take out public holidays, annual leave, sick days and training and you are left with 1,768. Take out the share of that time spent in internal meetings, admin and rework and the sample lands on 1,450 billable hours. The same cost divided by those three denominators gives three very different hourly figures: 39.65, 46.65 and 56.89.
That spread is the point of the template. The number most people carry in their head is salary over contracted hours — 25.96 in the sample. The number that has to be covered by a client invoice is 56.89. Billing at the first one loses nearly 31 on every hour sold, which is around 44,800 a year for a single person. The sheet prints that comparison as a sentence, then works backwards to the billing rate your target margin actually requires: 75.85 at 25%, 87.52 at 35%, 103.43 at 45%.
For an internal role — finance, operations, support — set the non-billable share to zero and read the available-hour cost instead. It is the right figure for deciding whether to hire, outsource or automate a task, because it is what the hour costs you whether or not anyone pays for it. Finmap keeps payroll, taxes and the overheads in this calculation in one place as they are paid, so the inputs come from your own accounts rather than from memory.
