First hire affordability calculator
Replace everything in [square brackets].
What's in the workbook
Four sheets after the read me: the full cost, the capacity freed, a two-year month-by-month run, and the answer on one page.
| Sheet | What it does |
|---|---|
| Read me | What the workbook is for, how to use it, and where it came from. |
| Full cost of the hire | Adds up what the hire really costs: the salary, the on-costs at your own rates, and the one-off and running costs that come with a new person. |
| Capacity freed | Works out the revenue the hire unlocks: the hours they take off you, what you do with those hours, and the work they bill themselves. |
| Month by month | Runs the hire month by month for two years: what they cost, what they unlock as they ramp up, and the running total. |
| Break-even | The answer on one page: what the hire costs a month, what they unlock, and the month the hire has paid for itself. |
Shaded cells are yours to fill in. Everything else calculates from them. Nothing is filled in for you: no benchmark, rate, salary or fee is typed in as a default, so every result is built from your own numbers.
Sheet 1: Full cost of the hire
Adds up what the hire really costs: the salary, the on-costs at your own rates, and the one-off and running costs that come with a new person.
| Line | Type | How it works |
|---|---|---|
| Base salary for a year | You fill in | The salary you will offer. The calculator does not suggest one. |
| Retirement contributions, % of salary | You fill in | Superannuation, pension or a 401(k) match, at the rate that applies to you. |
| Payroll tax, % of salary | You fill in | Only if it applies to your firm at its size and location. |
| Other employer taxes and levies, % of salary | You fill in | For example employer National Insurance or FICA and unemployment taxes. |
| Workers' compensation or employer insurance, % of salary | You fill in | Your insurer can quote it as a rate. |
| Leave loading, bonus or other costs, % of salary | You fill in | Anything else you budget as a share of pay. |
| On-costs for a year | Calculated | Salary x the five rates above. |
| Equipment (one-off) | You fill in | Laptop, screens, phone, desk. |
| Software and licences for a year | You fill in | An extra seat on each tool the hire will use. |
| Recruitment (one-off) | You fill in | Advertising, agency fee or your own time to hire. |
| Training and onboarding (one-off) | You fill in | Courses, and the senior time to train them. |
| Desk space and other costs for a year | You fill in | Leave at 0 if the hire works from home. |
| Full cost, first year | Calculated | Salary + on-costs + all five costs above. |
| Full cost, each year after | Calculated | Salary + on-costs + the yearly costs, without the one-offs. |
| Full cost a month | Calculated | Each year after / 12. |
| One-off costs | Calculated | Equipment + recruitment + training, paid in the first month. |
- On-costs for a year: Salary x the five rates above.
- Full cost, first year: Salary + on-costs + all five costs above.
- Full cost, each year after: Salary + on-costs + the yearly costs, without the one-offs.
- Full cost a month: Each year after / 12.
- One-off costs: Equipment + recruitment + training, paid in the first month.
Sheet 2: Capacity freed
Works out the revenue the hire unlocks: the hours they take off you, what you do with those hours, and the work they bill themselves.
| Line | Type | How it works |
|---|---|---|
| Hours a week the hire takes off you | You fill in | The work you do now that they will do. |
| Working weeks a year | You fill in | After leave and public holidays. |
| Hours freed a year | Calculated | Hours a week x working weeks. |
| Share of freed hours you will turn into billable work (%) | You fill in | Be honest: some of it goes on running the firm and managing the hire. |
| Your billable value an hour | You fill in | What an hour of your client work earns. The fee calculator works it out. |
| Revenue from your freed hours a year | Calculated | Hours freed x the share you reuse x your billable value. |
| Billable hours a week the hire does at full speed | You fill in | Client work they do themselves once trained. |
| What you charge for an hour of the hire's work | You fill in | Your price, not their pay. |
| Revenue the hire bills a year | Calculated | Hours a week x working weeks x your price an hour. |
| Revenue unlocked a year, at full speed | Calculated | Your freed hours + the hire’s own billing. Count each piece of work once. |
| Months until the hire is at full speed | You fill in | The workbook assumes they get there in a straight line. |
- Hours freed a year: Hours a week x working weeks.
- Revenue from your freed hours a year: Hours freed x the share you reuse x your billable value.
- Revenue the hire bills a year: Hours a week x working weeks x your price an hour.
- Revenue unlocked a year, at full speed: Your freed hours + the hire’s own billing. Count each piece of work once.
Sheet 3: Month by month
Runs the hire month by month for two years: what they cost, what they unlock as they ramp up, and the running total.
| Column | Type | What it is |
|---|---|---|
| Month | Set for you | Months since the hire started. |
| Speed | Calculated | Share of full speed: rises in a straight line to 100% at the ramp-up month. |
| Revenue unlocked | Calculated | Revenue unlocked a year / 12 x speed. |
| Cost of the hire | Calculated | Full cost a month, plus the one-off costs in month 1. |
| Net this month | Calculated | Revenue unlocked minus cost. |
| Running total | Calculated | All the months so far added together. |
| Paid back by now? | Calculated | Shows the month number once the running total is back above zero. |
- Speed: Share of full speed: rises in a straight line to 100% at the ramp-up month.
- Revenue unlocked: Revenue unlocked a year / 12 x speed.
- Cost of the hire: Full cost a month, plus the one-off costs in month 1.
- Net this month: Revenue unlocked minus cost.
- Running total: All the months so far added together.
- Paid back by now?: Shows the month number once the running total is back above zero.
Sheet 4: Break-even
The answer on one page: what the hire costs a month, what they unlock, and the month the hire has paid for itself.
| Line | Type | How it works |
|---|---|---|
| Full cost a month | Calculated | From the Full cost of the hire sheet. |
| Revenue unlocked a month, at full speed | Calculated | From the Capacity freed sheet. |
| Monthly gain at full speed | Calculated | Revenue unlocked minus cost. If this is negative, the hire never pays for itself at these numbers. |
| One-off costs to win back | Calculated | Equipment, recruitment and training. |
| Break-even month | Calculated | The first month the running total on Month by month is back above zero. |
| Running total after 24 months | Calculated | Gain or loss over the first two years. |
- Full cost a month: From the Full cost of the hire sheet.
- Revenue unlocked a month, at full speed: From the Capacity freed sheet.
- Monthly gain at full speed: Revenue unlocked minus cost. If this is negative, the hire never pays for itself at these numbers.
- One-off costs to win back: Equipment, recruitment and training.
- Break-even month: The first month the running total on Month by month is back above zero.
- Running total after 24 months: Gain or loss over the first two years.
Before you rely on it
The answer is only as good as the hours you enter. The two numbers that move it most are the share of freed hours you really reuse and the ramp-up months, so try a cautious version of both before you decide.
This workbook is a starting point, not financial, tax, employment or legal advice. It only knows the numbers you give it, so check them against your own records and take advice on anything you are unsure of.