The True Cost of Hiring an Employee (Beyond Salary)
Salary is only part of what an employee costs. See the seven costs most budgets miss, and how a dedicated remote hire changes the numbers.
By the Zenstack team · · 2 min read
When a small company budgets for a new role, it usually writes down one number: the salary. The real cost is higher, and knowing the full list helps you decide how to hire.
The seven costs beyond salary
- Payroll taxes. Employer contributions that sit on top of pay.
- Benefits. Health cover, paid leave, retirement contributions and other perks.
- Recruiting. Job ads, hours spent screening and interviewing, and sometimes an agency fee.
- Equipment and software. A laptop, licences and tool seats.
- Office costs. Space, internet and supplies, if the role is on site.
- Ramp-up time. Weeks or months of full pay before full productivity.
- Management time. Training, feedback and one-to-ones from someone senior.
Finance teams call the total the fully loaded cost. It is always higher than the salary, often by a wide margin. The exact amount depends on your location and benefits, so run the numbers for your own market.
The cost of a wrong hire
If a hire does not work out, you pay twice: the recruiting and ramp-up you already spent, then the same again for the replacement. Meanwhile the work is not getting done. This risk is easy to ignore and expensive when it happens.
A quick way to estimate
Add these for one year:
- Salary and any bonus
- Payroll taxes and benefits
- Recruiting cost, including your team's time
- Equipment and software
- A share of your manager's time
Divide by the hours worked in a year. That is your real hourly cost. As a rough planning figure, we estimate about $38 an hour for a comparable local hire in the roles we place. Your own figure may differ.
How a dedicated remote hire compares
With a remote hire through a staffing partner, several lines disappear or shrink:
| Cost | Local employee | Dedicated remote hire |
|---|---|---|
| Pay | Salary | Included in one fee |
| Payroll taxes and benefits | Yours | Handled by the partner |
| Recruiting | Yours | Included |
| Replacement if it fails | Start again | Free within the replacement period |
| Equipment and office | Yours | Not needed |
| Tools and management | Yours | Yours |
Through Zenstack, rates start at $12 an hour, about $1,920 a month full-time. Try the cost calculator to compare for your team size.
When a local hire is still right
A local employee makes sense for roles that need to be on site, senior leadership, or work with strict local licensing. For computer-based roles such as sales development, media buying, social media and assistant work, a remote hire often delivers the same output at a much lower cost.
Read what remote staffing is for how the model works, or freelancer vs full-time remote employee if you are weighing a contractor.
Frequently asked questions
What does fully loaded cost mean?
It is the total cost of employing someone: salary plus payroll taxes, benefits, recruiting, equipment, software and overhead.
How much more than salary does an employee cost?
It varies by location and benefits, so calculate it for your own market. The list in this article shows what to include.
Do I still pay for tools with a remote hire?
Yes. A remote team member uses your software, such as your CRM or ad accounts, the same as a local hire would.