Burdened Rate Calculator
Determine the true hourly cost of an employee by including all associated overhead costs.
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Calculation Results
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What is a Burdened Rate?
The burdened rate, also known as the fully loaded cost, is the true, total hourly cost of an employee to the business. It goes far beyond the employee's base wage or salary. This rate includes not only direct compensation but also all the "burdens" or indirect costs associated with employing that person. Understanding this figure is critical for accurate project bidding, job costing, and overall financial health.
The Components of the Burdened Rate
The calculation adds several layers of cost on top of an employee's base pay. Our calculator considers the most common factors:
- Base Pay: The employee's agreed-upon hourly wage.
- Payroll Taxes: Mandatory employer contributions, including Social Security, Medicare (FICA), and federal/state unemployment taxes (FUTA/SUTA).
- Paid Time Off (PTO): This includes vacation days, sick leave, and paid holidays. While the employee is paid, they are not generating revenue during this time, making it a direct cost.
- Insurance: The employer's portion of costs for health, dental, vision, and life insurance premiums.
- Retirement Contributions: Any matching funds the company contributes to an employee's 401(k) or other retirement plans.
- Other Costs & Overhead: A catch-all for other expenses like workers' compensation insurance, training programs, necessary equipment, software licenses, and even a portion of office rent.
How the Burdened Rate is Calculated
The formula provides a clear picture of total cost versus productive time:
Burdened Rate = (Total Annual Employee Cost) / (Total Annual Billable Hours)
Where:
- Total Annual Employee Cost = Base Annual Salary + All Indirect Costs (Taxes, Insurance, PTO, etc.)
- Total Annual Billable Hours = Total Work Hours – Non-Billable Hours (PTO, Holidays, etc.)
Practical Example
Let's see how this works for a fictional employee, Alex, who earns a base wage of $30 per hour.
- Base Hourly Rate: $30.00
- Annual Hours: 2080 (40 hours/week * 52 weeks)
- Base Annual Salary: $30 * 2080 = $62,400
- PTO & Holidays: 160 hours (4 weeks)
- Billable Hours: 2080 – 160 = 1920 hours
Now, let's add the burdens:
- PTO Cost: 160 hours * $30/hr = $4,800
- Payroll Taxes (7.65%): $62,400 * 0.0765 = $4,773.60
- Health Insurance: $7,000 per year
- 401k Match (3%): $62,400 * 0.03 = $1,872
- Other Costs (Training, etc.): $2,000 per year
Total Annual Cost: $62,400 (Salary) + $4,800 (PTO) + $4,773.60 (Taxes) + $7,000 (Insurance) + $1,872 (401k) + $2,000 (Other) = $82,845.60
Final Burdened Rate: $82,845.60 / 1920 Billable Hours = $43.15 per hour
As you can see, while Alex's pay is $30/hour, the true cost to the company is $43.15/hour. This 1.44x multiplier is crucial information for setting profitable service rates and managing budgets effectively.