Free Hiring Affordability Calculator. Find out if hiring an employee is safe, risky, or not affordable for your business.
Free Hiring Affordability Calculator. Find out if hiring an employee is safe, risky, or not affordable for your business.
Generated: 1/13/2026, 3:19:01 AM | AskSMB.io
Make data-driven hiring decisions. Find out if bringing on a new employee is safe, risky, or beyond your current budget.
Gross annual salary for the new hire
Taxes, insurance, benefits as % of salary (typically 20-30%)
Net profit per month before hiring
Expected monthly growth after hiring (optional)
Employee salary must be greater than zero
Premature hiring is one of the top killers of small businesses and startups. When you hire before your business can sustain the cost, you trigger a cash burn spiral that's hard to escape:
Many founders hire "for growth" but end up burning through their runway before the growth materializes. This calculator forces you to face the math before making an emotional decision.
First-time employers often drastically underestimate the total cost of hiring. A $60,000 salary doesn't cost $60,000—it costs $72,000-$85,000+ when you include:
| Cost Component | % of Salary |
|---|---|
| Base Salary | 100% |
| Employer FICA/Medicare | 7.65% |
| Unemployment Insurance | 0.6-6% |
| Workers Compensation | 1-10% |
| Health Insurance | 10-25% |
| 401(k) Match | 3-6% |
| PTO / Sick Days | 8-15% |
| Total Burden | 30-60% above salary |
This calculator uses a default 20% burden rate, but verify your actual costs. Some industries (construction, manufacturing) have much higher workers comp rates. Healthcare benefits can easily add $15,000-$20,000 per employee annually.
This calculator considers a hire "safe" if you retain at least 20% of your current profit after paying for the new employee. Why 20%?
If you're below the 20% threshold, the calculator flags the hire as "risky." You can still proceed, but you need contingency plans: line of credit, ability to cut other costs, strong revenue pipeline.
Sometimes hiring before you have the full profit buffer makes sense—if growth is strong and the hire directly enables more revenue. The calculator accounts for this with the "Revenue Growth (%)" field.
A hire is considered "safe" even with a thinner profit buffer if projected growth will offset 80%+ of hiring costs within 6 months. This recognizes scenarios like:
Critical: Only enter growth rates you have strong evidence for. "We'll grow faster with this hire" is hope, not a plan. "We have $200k in stalled deals that need a dedicated sales rep" is evidence.
If any of these are true, wait 2-3 months before hiring:
Delaying a hire by 60 days to build more profit is almost always the right move. That extra cash gives you negotiating power, reduces hiring pressure, and ensures you can afford mistakes.
Let's walk through a real-world example:
Monthly Salary = $60,000 ÷ 12 = $5,000
Payroll Cost = $5,000 × 20% = $1,000
Total Monthly Hiring Cost = $6,000
Profit After Hiring = $8,000 - $6,000 = $2,000
Profit Buffer = $2,000 ÷ $8,000 = 25%
🟡 Risky – Proceed With Caution
You'll retain 25% of current profit (above the 20% safe threshold), but it's tight. One bad month or unexpected expense could push you into losses. The 5% monthly growth helps, but isn't guaranteed. Consider: (1) Negotiating salary to $50k, or (2) Waiting 2 months to build profit to $10k/month, or (3) Hiring part-time first.