Example
Input: $50,000 Salary
Result: $65,000 - $70,000 Total Cost
Step-by-Step Guide
- 1 Base Salary
- Enter the annual gross salary offered.
- 2 Tax Rate
- Add employer payroll taxes (typically ~8-10%).
- 3 Benefits Load
- Estimate value of insurance and retirement match (often ~20%).
- 4 Calculate Burden
- View the total annual cost to the company.
What is Employee Total Cost Calculator (Burdened Cost)?
The Employee Total Cost Calculator (often called a 'Burdened Cost Calculator') helps employers and freelancers understand the real expense of a full-time employee beyond just the base salary. While a salary might be $50,000, the actual cost to the company is often 1.25x to 1.4x higher due to mandatory payroll taxes, health insurance, retirement contributions, and equipment/overhead.
How it Works
The calculation starts with the Base Salary. It then adds: 1. Mandatory Taxes (FICA: 7.65% employer portion, Unemployment Insurance). 2. Benefits (Health, Dental, 401k match). 3. Overhead (Equipment, Software licenses, Office space). The sum of these is the 'Fully Burdened Cost'. This figure is crucial for setting pricing models or deciding between hiring FTEs vs contractors.
FAQ
What is the average burden rate?
Typically 1.25 to 1.4 times the base salary.
Why hire employees if they cost more?
Employees offer stability, cultural continuity, and long-term IP retention that contractors may not.
What are mandatory costs?
In the US: Social Security, Medicare, FUTA (Unemployment), and Worker's Comp.
Does this include equipment?
You can add equipment/overhead as a fixed cost or percentage.
How do contractors save money?
Employers pay zero benefits or payroll taxes for contractors; they pay a flat fee.
Conclusion
For employers, this tool prevents budget shortfalls. For freelancers, it justifies why your hourly rate is higher than a salaried equivalent—you cover these costs yourself. Understanding 'burdened cost' is the key to profitable hiring and fair freelance pricing.