Break-Even Employee Calculator

Determines the monthly revenue a new hire must generate to cover their fully loaded cost. Total cost includes salary, employer-paid taxes (typically 7.65% FICA), benefits (15–30% of salary), and overhead allocation.

Break-even revenue equals total cost divided by the company's gross margin. Time-to-break-even depends on ramp speed and sales cycle length.

The fully-loaded cost of an employee in the US extends well beyond base salary. Employer-paid FICA (Social Security and Medicare) is 7.65% of wages up to the Social Security wage base ($168,600 in 2024), then 1.45% above that. State unemployment insurance (SUTA) and federal unemployment (FUTA) add 1-6% depending on state and claim history. Workers' compensation insurance varies by industry, from under 1% for office workers to 10%+ for construction and manufacturing. Benefits are the largest non-salary component: health insurance averages 15-20% of salary for US employers, retirement matches add 3-6%, and paid leave (vacation, sick days, holidays) is implicit additional cost. Total loaded cost typically runs 1.25-1.4× base salary for most office roles, 1.5×+ for tech companies that include equity vesting at fair value.

A worked example: a $100,000/year salaried hire at a 1.3× load multiplier costs $130,000/year, or $10,833/month fully loaded. To break even, the employee must generate $10,833 of contribution margin per month. At a 60% gross margin, that requires $18,055/month in revenue. At 40% margin, $27,083/month. The gross margin determines how much of each revenue dollar covers employee cost; lower-margin businesses need proportionally higher revenue per employee to break even.

Limitations and ramp-time considerations are critical for sales hires. A new account executive might produce zero revenue for the first 3-6 months while learning the product, building pipeline, and closing first deals. The calculator includes a ramp factor that scales expected revenue downward during the early period. Engineers typically don't have a 'revenue' attached directly; they're evaluated by their contribution to product features that generate revenue indirectly. For those roles, break-even is an exercise in attribution rather than direct measurement.

The distinction between break-even and profitability matters. A break-even hire covers their direct cost but contributes nothing to fixed overhead (rent, executive salaries, marketing) or net profit. A profitable hire generates beyond their cost; the surplus contributes to overhead and profit. Healthy businesses typically expect employees to generate 2-3× their fully loaded cost in revenue, not just break even. The 2× rule of thumb (revenue per employee should be at least 2× their loaded cost) is widely cited in operating-budget planning, though specific industries vary considerably.