Will a New Hire Pay for Itself?
A hire costing $91,590 loaded, at a 20% margin, requires about $457,950 of added revenue to break even — roughly $38,163/month. At 40% margin that drops to $228,975. Margin is the lever that decides whether the hire pays off.
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Results
Visualization
Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.
How It Works
Added Revenue = Loaded Cost / Profit Margin%. This is the reverse of 'profit = revenue x margin': solve for the revenue that produces enough profit to cover the hire. It assumes the new revenue carries the same margin as the business and ignores ramp time.
What Should You Do?
Scenario 1: a sales hire at 30% margin needs $305k revenue — if they can sell $400k, they are clearly worth it. Scenario 2: at 10% margin even a $60k hire needs $600k revenue. Scenario 3: account for a 3-month ramp by adding a quarter of cost to the target.
Frequently Asked Questions
What margin should I use?
Your blended net margin after all costs, not gross. Be conservative.
Should I include ramp time?
Yes — new hires rarely produce immediately; add 1-3 months of cost to the target.
How does this relate to loaded cost?
Use our Loaded Employee Cost tool first to get the true hire cost.
Authoritative References
- SBA — Hiring — Hiring cost and planning for small business.
- Investopedia — Contribution Margin — Margin used to cover fixed costs like a new hire.