Can I Afford to Hire? Calculator
The revenue, cash and ramp time a new hire requires before they pay for themselves.
Your numbers
Your result
- Monthly cost of the hire
- $6,833
- Revenue required to cover them (year)
- $195,238
- Revenue required per month
- $16,270
- Gross profit they add once ramped (monthly)
- $9,240
- Month they start covering themselves
- 3
- First-year profit impact
- $15,944
- Cash you need to fund the rampDeepest cumulative shortfall plus the cash tied up waiting on collections.
- $20,853
You can afford this hire.
They need to produce about $16,270 a month to carry their own cost, and your cash covers the ramp. Put the revenue target in writing on day one and review it monthly.
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What this number actually tells you
A hire is not a payroll decision, it's a revenue decision. At a 42% gross margin, an $82,000 employee requires roughly $195,000 of new revenue a year just to break even. If you don't know where that revenue comes from, you're not hiring — you're gambling.
The second half is cash. Even a hire who eventually pays for themselves costs money for the first few months, because they ramp slowly and your customers pay slowly. That gap is where owners get hurt, and it's the part nobody models.
This calculator handles both: the revenue the hire must produce, and the cash you need on hand to get them to the point where they do.
How the math works
- 01Revenue required = true annual cost ÷ gross margin %.
- 02Monthly gross profit added = added monthly revenue × gross margin %, scaled by a productivity ramp from month-one % up to 100% over the ramp period.
- 03Monthly net = gross profit added − (annual cost ÷ 12).
- 04Cash needed = deepest cumulative negative month + cash tied up in collections (added revenue × collection days ÷ 30 × cost share).
- 05Break-even month = the first month where added gross profit covers the monthly cost.
What to do with the answer
- Set the revenue target with the employee on day one. A hire without a number attached is an expense, not an investment.
- If cash is the constraint, hire contract or part-time first and convert once the revenue proves out.
- Shorten the ramp instead of lowering the wage. Two weeks of real onboarding is worth more than a dollar an hour.
- Re-run this before every hire, including replacements. Costs and margins move.
Want someone to read these numbers with you?
The Growth Assessment is a 30-minute conversation about what your numbers are telling you and what to fix first. No pitch deck, no PDF.
Schedule Your Growth Assessment Or call (737) 888-0415Questions owners ask about this
How much revenue does a new employee need to generate?
Their fully burdened cost divided by your gross margin. At a 40% margin, an $80,000 employee needs $200,000 in revenue to break even — and considerably more to actually contribute profit.
How long before a new hire pays for themselves?
In most service businesses, three to six months for a field role with structured onboarding, longer without it. The biggest variable isn't the person, it's whether you have a documented training process.
Should I hire before or after the work exists?
Slightly before, if you have the cash and a real pipeline — capacity constraints cost you jobs. But 'slightly' means weeks, not quarters, and only when you can name the revenue that will fill the role.
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