1. What is Employee Cost Per Hour?

The Employee Cost Per Hour is a financial metric that calculates how much an employee costs per working hour. It's calculated by dividing the employee's total salary by the number of hours they work.

2. How Does the Calculator Work?

The calculator uses the following simple formula:

Where:

• Running Salary — The employee's total salary (USD)
• Running Hours — The total number of hours worked (hours)

Explanation: This calculation helps businesses understand the true hourly cost of their employees, which is essential for budgeting, pricing, and profitability analysis.

3. Importance of Cost Per Hour Calculation

Details: Knowing your employee cost per hour is crucial for accurate project costing, service pricing, labor budgeting, and overall financial planning. It helps businesses determine if they're utilizing their human resources efficiently.

4. Using the Calculator

Tips: Enter the employee's total salary in USD and their total working hours. Both values must be positive numbers. The calculator will automatically compute the cost per hour.

5. Frequently Asked Questions (FAQ)

Q1: Should I include benefits in the salary figure?
A: For a complete picture, you should include all employment costs (salary, benefits, taxes, etc.) in the Running Salary figure.

Q2: What counts as "running hours"?
A: Typically, this includes all paid hours - both productive working hours and paid time off. Some businesses prefer to calculate based on actual working hours only.

Q3: How can I reduce my cost per hour?
A: You can either reduce salary costs (carefully) or increase productive hours through better scheduling and efficiency.

Q4: Is this different from billable rate?
A: Yes, cost per hour is your expense. Billable rate would be higher to include overhead and profit margin.

Q5: How often should I calculate this?
A: Regularly - at least quarterly - as salaries and working hours may change over time.