The cost of an employee is pay plus everything the employer adds on top: payroll taxes, workers' compensation, benefits, and equipment and software. For a salaried employee with no commission it usually runs about 1.25 to 1.35 times salary. For a sales rep, start from base plus commission at target, because the employer pays payroll tax on both.
The defaults are an illustrative SaaS account executive: $100,000 base and $100,000 of commission at target. Set variable pay to 0 for a role without commission.
Annual wages are the hourly rate times hours per week times 52 weeks of paid time, including paid leave.
Pay
Employer taxes and insurance
Benefits, equipment and software (a year)
First year only
| Line | Per year | % of cash pay |
|---|
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Employee cost formula, line by line
Each line in the calculator comes from one of these formulas. Cash pay is base salary (or hourly wage x hours x 52) plus commission or bonus at target. Rates are the 2026 federal figures, linked in the sources at the end.
| Line | Formula | 2026 rate and limit |
|---|---|---|
| Social Security (employer) | 6.2% x cash pay, up to the wage base | 6.2% of the first $184,500, so at most $11,439 per employee |
| Medicare (employer) | 1.45% x all cash pay | 1.45%, no limit. The 0.9% Additional Medicare Tax above $200,000 is employee only |
| Federal unemployment (FUTA) | Net rate x first $7,000 of pay | 6.0% less a credit of up to 5.4%, so 0.6% or $42 for most employers |
| State unemployment (SUTA) | Your rate x your state's wage base | Set by each state and by your layoff history |
| Workers' compensation | Policy rate x pay | Set by your insurer and class code |
| Health insurance | Employer share of the annual premium | KFF 2025 averages: $9,325 single, $26,993 family, of which workers pay $1,440 and $6,850 |
| Retirement match | Match % x base pay | Your plan's formula |
| Equipment and software | Annual cost per seat | Your contracts |
| Fully loaded cost | Cash pay + all lines above | Per year; divide by 12 for a month, by paid hours for an hour |
| First-year cost | Fully loaded cost + recruiting + monthly cost x ramp months x (1 - ramp output) | One time, in the hire's first year |
The employer's health share comes from KFF's survey: $9,325 - $1,440 = $7,885 for single coverage, and $26,993 - $6,850 = $20,143 for family coverage. Those are national averages; your broker's renewal is the number to use.
Two worked examples
Both use the calculator's defaults for taxes, benefits and tools, which are illustrative except where a source is linked above.
| Line | Salaried employee, $70,000, no commission | Account executive, $100,000 base + $100,000 commission |
|---|---|---|
| Cash pay | $70,000 | $200,000 |
| Social Security (6.2%) | $4,340 | $11,439 (capped at $184,500) |
| Medicare (1.45%) | $1,015 | $2,900 |
| FUTA + SUTA | $42 + $189 | $42 + $189 |
| Workers' compensation (0.5%) | $350 | $1,000 |
| Health, retirement (3% of base), other benefits | $7,885 + $2,100 + $1,500 | $7,885 + $3,000 + $1,500 |
| Equipment and software | $6,000 | $6,000 |
| Fully loaded cost per year | $93,421 | $233,955 |
| Cost on top of cash pay | $23,421 (33.5%) | $33,955 (17.0%) |
| Per month / per paid hour (2,080 hours) | $7,785 / $44.91 | $19,496 / $112.48 |
The percentage on top of pay is half as large for the account executive, even though the dollar amount is larger. Health insurance, tools and unemployment tax are roughly the same per person whatever the pay, and Social Security stops at $184,500. So the burden rate falls as pay rises. A single burden percentage applied to every role in a headcount plan overstates the cost of high earners and understates the cost of lower-paid roles.
What the BLS says employees cost
The Bureau of Labor Statistics measures employer costs every quarter. In its June 2026 release, private-industry employers paid $46.89 per hour worked: $32.82 in wages and salaries (70.0%) and $14.07 in benefits (30.0%). For full-time private-industry workers the figure was $54.00 per hour, with benefits at $17.03 (31.5%). Legally required benefits, the payroll taxes and insurance an employer must pay, were $3.76 per hour for full-time workers, 7.0% of compensation.
Read the BLS benefit share with one adjustment. BLS counts paid leave and supplemental pay, such as bonuses, as benefits, and measures cost per hour actually worked. A salary already pays for vacation days, so if you start from salary, as this calculator does, do not add paid leave again.
First-year cost: recruiting and ramp
The recurring cost is what a role costs each year once the person is in the seat. The first year costs more, for two reasons:
- Recruiting. Agency fees, job ads, assessments and interview time. Enter what you actually pay; an agency fee is usually quoted as a percentage of first-year salary in the agency's contract.
- Ramp. A new hire costs a full salary from the first day and produces less than full output for months. The calculator prices that gap as monthly cost x ramp months x the share of output you do not get. With the defaults, six months at 50% output is $58,489.
For quota-carrying roles the ramp is longer than most plans assume. Pete Furseth, ORM's COO, says "it can take a seller 15 to 18 months to confidently hit quota" (ORM insight board, q38). Set the ramp from your own reps' history if you have it. ORM's guide to sales rep ramp time shows how to measure it.
Using employee cost in a headcount plan and budget
- Headcount plan. Price each planned hire at its fully loaded cost from its start month. The headcount planning template rolls hires, backfills and cost by quarter.
- Operating budget. People are the largest line in most SaaS operating budgets. Budgeting salaries alone leaves out the taxes, benefits and tools on this page.
- Cost per rep. For sales capacity math, the fully loaded cost per rep adds an allocated share of management and enablement on top of this calculator's result.
- Pay design. To set base and variable before you cost the role, use the OTE calculator.
- SDR roles. For the cost per meeting and per opportunity of an SDR team, Growigami's SDR cost calculator takes the same loaded cost further.
Common employee cost mistakes
- Leaving out commission. Payroll taxes and, often, retirement match apply to it. For a 50/50 sales role, the cost of base alone is about half the real number.
- One burden rate for everyone. As the examples show, the rate falls as pay rises. Cost roles one by one, or at least by pay band.
- Using the family premium for everyone, or the single premium for everyone. Use your actual mix of coverage tiers.
- Forgetting the wage base resets. Social Security and unemployment taxes start again each January, so payroll tax cost per month is highest early in the year.
- Treating contractors like employees. A contractor's rate includes their own taxes and benefits. Compare the contractor rate with the fully loaded employee cost, not with salary.
This calculator is for planning and budgeting. It is not tax, legal or payroll advice. State taxes, local taxes and benefit rules vary; your payroll provider and benefits broker have the exact figures.
ORM's take on employee cost and the revenue plan
For a SaaS company, the cost of a sales hire is easy to calculate and hard to time. The cost starts on the hire's first day. The revenue arrives after ramp, and only if the pipeline is there. That is why the hiring dates in a plan matter as much as the headcount total.
ORM builds capacity models and bookings forecasts for B2B SaaS companies from CRM data, so finance can see which hires the revenue plan needs, and when they need to start. ORM targets 95% accuracy on the forecasts it builds.
Common questions
How do you calculate the cost of an employee?
Add five things for a year: pay (salary or hourly wages, plus commission or bonus at target), employer payroll taxes (Social Security, Medicare, federal and state unemployment), workers' compensation insurance, benefits (health insurance, retirement match and others) and equipment and software. For the first year, add one-time recruiting cost and the cost of ramp time. Divide by 12 for the monthly cost and by paid hours for the hourly cost.
How much does an employee cost on top of salary?
For a salaried employee with no commission, employer costs on top of pay usually add about a quarter to a third. In this page's illustrative $70,000 example they add $23,421, or 33.5%. The Bureau of Labor Statistics reports that benefits were 30.0% of private-industry employer compensation costs in June 2026, $14.07 of $46.89 per hour worked, but its benefits figure also counts paid leave and bonuses that a salary already includes.
How much does a $100,000 employee cost?
With this calculator's other defaults and no variable pay, a $100,000 salaried employee costs about $126,766 a year: $7,881 of employer payroll taxes, $500 of workers' compensation, $12,385 of benefits and $6,000 of equipment and software. That is 1.27 times salary. Your number moves most with health plan cost, retirement match and your state's unemployment rate.
Are commissions and bonuses subject to employer payroll taxes?
Yes. The IRS treats bonuses and commissions as supplemental wages, so the employer pays its 6.2% Social Security share up to the $184,500 wage base for 2026 and its 1.45% Medicare share on every dollar. Above $184,500 of total cash pay, the employer stops paying Social Security for the year, which is why the tax share of a high-earning sales rep's cost is lower than for a lower-paid employee.
What is the fully loaded cost of an employee?
The fully loaded cost is everything the company pays to employ someone for a year: pay, employer taxes, insurance, benefits, and the equipment and software they need. Some companies also allocate a share of rent, management and overhead. For sales roles it usually means base plus commission at target, which is the number to use in a headcount plan, a CAC calculation or a cost per rep.
Is stock-based compensation part of employee cost?
It is a real cost and shows up as an expense on the income statement, but it is not cash. This calculator leaves it out because it plans cash cost for a budget or a hiring plan. If you need the accounting cost of a role, add the annual expense of the equity grant from your stock plan schedule separately.
Sources
- Social Security Administration, Contribution and Benefit Base: $184,500 for 2026; OASDI 6.2% and HI 1.45% each for employers and employees; no HI limit. Checked November 13, 2026.
- IRS, Topic no. 759, Form 940: FUTA rate 6.0% on the first $7,000; credit of up to 5.4%; 0.6% after the full credit. Checked November 13, 2026.
- IRS, Publication 15 (2026), Employer's Tax Guide: bonuses and commissions are supplemental wages; no employer share of Additional Medicare Tax.
- KFF, 2025 Employer Health Benefits Survey: average premiums $9,325 single and $26,993 family; worker contributions $1,440 and $6,850.
- U.S. Bureau of Labor Statistics, Employer Costs for Employee Compensation, June 2026.
- Pete Furseth, ORM COO, ORM insight board, 2026 (q38): seller ramp of 15 to 18 months.
- State unemployment, workers' compensation, other benefits, equipment, recruiting and ramp defaults: illustrative, with the arithmetic shown on this page.
Know when each hire has to start
The cost starts on day one. The revenue comes after ramp. ORM models both.
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