How to Estimate Salary Cost

Whether you're thinking about a full-time employee, a part-time hire, or an hourly contractor, here's how to convert that into a monthly number.

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Option 1: Use the monthly salary directly

If you already know the annual or monthly salary, this is the easiest path.

Monthly salary cost = annual salary ÷ 12

$42,000/year salary $42,000 ÷ 12 = $3,500/month

$60,000/year salary $60,000 ÷ 12 = $5,000/month

Option 2: Estimate from an hourly rate

If you're hiring hourly or part-time, use this formula:

Monthly salary cost = hourly rate × hours per week × 4

Part-time at $20/hr, 20 hrs/week $20 × 20 × 4 = $1,600/month

Full-time at $18/hr, 40 hrs/week $18 × 40 × 4 = $2,880/month

Contractor at $50/hr, 10 hrs/week $50 × 10 × 4 = $2,000/month

Should you include taxes and benefits?

For a rough decision-making estimate, the base salary or pay rate is usually enough. If you want to be more conservative, add 15–25% to account for payroll taxes and any benefits you plan to offer.

The goal here is a close enough number to help you decide — not a payroll report. If you're also wondering whether this hire will increase your revenue, that guide walks through how to think about it.

Once you have a rough number, plug it into the calculator to see if hiring is safe.

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