How the hiring plan cost is calculated

The calculator treats your hiring plan as a portfolio of identical “average hires” across the chosen horizon. It does not try to predict start dates or staggered hiring. Instead, it answers the question most teams actually need: “If we add N people, what total budget should we reserve for the next X months?”

• Salary total = hires × average salary × (horizon months ÷ 12)
• Example: 3 hires × $120,000 × (12/12) = $360,000

• Benefits total = salary total × (benefits % ÷ 100)
• This is where you can “bundle” payroll taxes, health benefits, 401(k) match, and other employer costs.

• Recruiting total = hires × recruiting cost per hire
• Include: agency fees, job boards, background checks, referral bonuses, recruiter time, and interview loops.

• Equipment total = hires × equipment per hire
• Include: laptop, monitors, peripherals, software licenses, security keys, and provisioning labor.

• Onboarding total = hires × onboarding hours × blended hourly onboarding cost
• “Blended cost” is intentionally flexible. If onboarding requires a manager, senior engineer, and ops, pick an hourly rate that reflects the weighted mix.

• Ramp loss total = hires × salary × (ramp loss % ÷ 100) × (min(ramp months, horizon months) ÷ 12)
• This approximates the value of time you’re paying for before the person reaches full productivity. It’s not “wasted” — it’s the cost of learning, context, and calibration.

• Total cost = salary + benefits + recruiting + equipment + onboarding + ramp loss
• Monthly burn = total cost ÷ horizon months
• Budget gap = budget − total cost (positive = under budget)

Three quick scenarios

Use these examples to sanity-check your numbers and communicate tradeoffs. The big insight: small percentage changes compound across hires and months.

• 3 hires, $120k salary, 22% benefits, $6k recruiting, $2k equipment
• 20 onboarding hours @ $85/hr, 3 months ramp at 25% loss, 12-month horizon
• Result: cost is meaningfully higher than $360k salary — because reality includes everything around salary.

• Same as A, but recruiting cost per hire = $18k
• Insight: recruiting is front‑loaded cash. If you’re runway‑constrained, this can matter more than annualized cost.

• Same as A, but ramp months = 6 and ramp loss = 45%
• Insight: ramp is often the quiet killer in senior roles and complex domains. If a role takes 6 months to ramp, you’re buying time.

A simple workflow for founders, ops, and managers

The easiest way to use this calculator is to treat it like a negotiation between three forces: growth (we need capacity), cash (we have constraints), and complexity (new hires create coordination work).

• “Can we hire 2 engineers next quarter?”
• “What’s the total cost of adding a sales rep + CS rep for 12 months?”
• “If we hire now, how much extra budget do we need?”

• 3–6 months: tactical (runway, near-term execution)
• 12 months: standard annual planning
• 18–24 months: longer runway / strategic headcount

• Lean startup: you might set 15–25%
• More comprehensive benefits or higher payroll costs: 25–40%
• If you want to include bonus, commission, or employer taxes, increase this value.

• Onboarding hours should include manager time, peer pairing, code reviews, shadowing, and process training.
• Ramp loss captures “not at full output yet.” For brand-new functions or complex products, it’s often higher than you think.

• If you’re over budget, you only have a few levers: reduce hires, reduce comp, reduce recruiting costs, reduce scope, or increase budget.
• If you’re under budget, the tool gives you confidence to invest — or to add a buffer for uncertainty.

Frequently Asked Questions

• Does this include equity, bonuses, or commissions?

  Not explicitly. If those are meaningful for your roles, you can approximate them by increasing the benefits & payroll load percentage (or by increasing average salary to reflect “cash equivalent”).

• Why treat ramp loss as a cost based on salary?

  Salary is the most consistent proxy for “capacity you’re paying for.” Ramp loss is the portion of that capacity you don’t get immediately. It’s not a judgment — it’s a planning reality.

• What if hiring is staggered over time?

  This tool assumes a simplified “average hire” model. For staggered start dates, run two scenarios: (1) the full plan and (2) a smaller near-term plan (e.g., 3–6 months). The truth will sit between them.

• How should I estimate recruiting cost per hire?

  Add the direct cash (job board, agency fee, referral bonus) plus the opportunity cost of interview loops and recruiter time. If you don’t know, use a conservative placeholder (e.g., $3k–$10k) and refine after your first few hires.

• What’s a “good” benefits & payroll load percentage?

  It depends on region and benefits design. Many companies plan in the 15–35% range. If you offer strong healthcare, have higher employer taxes, or include bonuses, you may be closer to the top of that range.

• Can I use this for contractors or freelancers?

  Yes — treat the “salary” slider as an annualized contractor cost (hourly rate × expected hours/year) and set benefits close to 0%. Recruiting and equipment may still apply depending on how you source and onboard contractors.

What this calculator intentionally ignores

To stay fast and shareable, the model excludes a few items that are real — but vary wildly between companies. If you want a more conservative estimate, you can fold these into benefits %, onboarding rate, or recruiting cost:

• Facilities: desks, office, IT support, coworking memberships.
• Software stack: per-seat tools (if not included in equipment).
• Bonuses/variable pay: sales commissions, performance bonuses.
• Employer taxes by region: especially outside the U.S.
• Attrition: if you expect turnover, recruiting and ramp costs repeat.

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