Employee True Cost Calculator

The Gap Between Wage and True Cost

When you hire a technician at $22/hour, that’s not what they actually cost you. By the time you add employer payroll taxes, health benefits, equipment, uniforms, and paid time off, the true cost is often 30–50% higher than the base wage.

Understanding this gap is essential for two things: accurate job pricing and smarter hiring decisions.

What’s Included in “True Cost”

Annual wages — Hourly wage × weekly hours × 52 weeks. This is your baseline.

Payroll taxes — Employers pay Social Security and Medicare (FICA) matching at 7.65%, plus federal and state unemployment taxes. The US default in this calculator is 15.3%, which is a conservative estimate that captures the bulk of employer tax burden.

Benefits — Health insurance contributions, 401(k) matching, paid time off value, sick days, and any other benefits you offer.

Equipment and tools — Uniforms, personal protective equipment, hand tools, vehicle assignment costs, and any technology (phone, tablet) provided to the employee.

The Overhead Multiplier

The multiplier shows you how much you need to charge per labor-hour to cover the true cost of that employee. If a technician costs you $32/hour all-in but you’re only charging $30/hour for their labor, you’re losing money on every hour they work.

A typical multiplier for field service technicians ranges from 1.25× to 1.60× depending on your benefits package and market.

Using This for Job Pricing

Plug your true hourly cost into your estimating process. If an employee truly costs $38/hour and a job takes 3 hours, your labor cost alone is $114 — before materials and overhead. Price accordingly.