Do you know what your staff really cost you?
It’s tempting to glance at an employee’s salary or hourly rate and think you’ve got the answer. But that number only scratches the surface. Once you start adding in annual leave, public holidays, sick days and then look at how many hours are actually productive, the real cost can be a lot higher than you’d expect.
And here’s why it matters: if you don’t understand the true cost of your team, you’re flying blind when it comes to pricing your services, managing productivity, and making hiring decisions.
Let’s put this into perspective with a real example. Say you’ve got an employee on a $75,000 salary. On paper, that works out to about $1,450 a week. Sounds straightforward, right?
But as you know, your employees never work the full 52 weeks of the year. Between annual leave, public holidays, and the odd sick day, those neat weekly figures start to unravel pretty quickly. The reality is far more eye-opening once you dig a little deeper.
Here everything else you need to account for:
- 4 weeks of annual leave
- 2 weeks of public holidays
- 2 weeks of sick leave (on average)
- Plus other entitlements such as bereavement or long service leave
When you add it all up, that’s around 8 weeks away from work each year.
So instead of 52 working weeks, your employee is realistically giving you closer to 44 weeks of actual work time.
The Real Cost Per Week
Using this example:
- Annual salary: $75,000
- Paid weeks: 52
- Real weeks worked: 44
So instead of $1,450 per week, they’re costing you:
$75,000 ÷ 44 = $1,705 per actual working week
Now let’s take it a step further.
Your employee might be working a 40-hour week, but not all of those hours are billable to clients or income-generating. If only 30 of those hours are chargeable, that means they’re operating at 75% productivity (30 ÷ 40).
When you factor that in:
- 44 working weeks × 75% = 33 weeks of productive time per year
- $75,000 ÷ 33 = $2,273 per productive week
So while you thought you were paying $1,450 per week, you’re really paying closer to $2,273 per week of productive work.
Why This Matters for Business Owners
Knowing the true cost of your employees gives you the power to:
- Price your services correctly
- Understand productivity gaps and how they affect profitability
- Plan cashflow with real numbers, not guesses
- Make better hiring decisions backed by clear data
It’s not about penny-pinching, it’s about clarity. Once you know the numbers, you can make smarter decisions that strengthen your business.
Download our free ‘True Cost of Staff’ Calculator
Crunching the numbers manually can be tricky, so we’ve built a tool that does the hard work for you.
Our True Cost of Staff Calculator lets you enter your figures and instantly see what each week and each productive hour really costs your business.
👉 https://mailchi.mp/c887754c4c63/employeecosts
Take the guesswork out of wages and see your true numbers today.
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