Overtime vs. New Hire Calculator
Overtime vs. New Hire Calculator
Overtime vs. New Hire Calculator
Should you keep paying overtime—or is it time to hire another employee?
As overtime increases, many business owners eventually face the same question: At what point does hiring another employee make more financial sense?
The Overtime vs. New Hire Calculator helps you answer that question using your actual wage, overtime, benefit, payroll burden, hiring cost, and productivity assumptions.
Enter your numbers and the calculator automatically compares the annual cost of overtime with the fully loaded cost of adding one employee.
Enter Your Business Assumptions
Customize the calculator using:
• Base hourly wage
• Overtime multiplier
• Payroll and other wage burden
• Annual employee benefits
• Recruiting and onboarding costs
• Regular hours per week
• Current overtime hours per week
• Paid weeks per year
• Expected new-hire productivity
Calculate Your True Overtime Cost
The calculator automatically determines your loaded overtime hourly cost, incorporating both the overtime multiplier and employer wage burden.
It then calculates the annual cost of maintaining your current overtime workload.
Calculate the True Cost of Hiring
Compare overtime against both:
Year 1 Hire Cost
Includes loaded wages, annual benefits, and one-time recruiting/onboarding costs.
Ongoing Hire Cost
Shows the expected annual employee cost after the initial recruiting and onboarding expense is removed.
Find Your Break-Even Point
One of the most valuable features of the calculator is the automatic break-even analysis.
See:
✓ Year 1 break-even overtime hours per week
✓ Ongoing break-even overtime hours per week
✓ Annual overtime cost
✓ Year 1 new-hire cost
✓ Ongoing new-hire cost
✓ Savings from the lower-cost option
This helps answer:
“How many overtime hours per week would make hiring financially more attractive?”
Don't Forget Employee Capacity
Hiring may be less expensive—but can one employee actually handle the workload?
The calculator adjusts the employee's regular weekly hours using your expected new-hire productivity percentage to determine the employee's effective productive capacity.
If your overtime requirement exceeds that capacity, the calculator alerts you that:
One hire cannot absorb all overtime.
That's an important distinction when evaluating staffing decisions based on cost alone.
Built-In Overtime Scenario Analysis
See how the decision changes as overtime increases.
The workbook automatically compares overtime and hiring costs at overtime levels ranging from:
0 to 50 overtime hours per week
For each scenario, the calculator identifies whether:
Overtime is the lower-cost option
Hire is the lower-cost option
or
Beyond One-Hire Capacity
Great For:
Small business owners • Manufacturing companies • Contractors • Warehouses • Service businesses • Operations managers • HR professionals • Finance professionals • Companies experiencing sustained overtime
Digital Product
This is a downloadable Microsoft Excel calculator with built-in formulas and automatic cost comparisons. No physical product will be shipped.
Simply replace the sample assumptions with your company's information and the calculator updates automatically.
Compare the cost. Find the break-even point. Check the capacity. Make a more informed staffing decision.
Important: This calculator is a business planning tool. Results are estimates based on the assumptions entered by the user. Staffing decisions may involve operational, employee-relations, safety, legal, scheduling, recruiting, and other considerations beyond direct cost. This tool does not constitute accounting, tax, legal, HR, or financial advice.