Can revenue support a new hire?. The Grow vs Hire Calculator takes fully loaded annual cost of the hire, gross margin, current annual revenue and returns extra revenue needed to pay for the hire plus growth required, extra revenue per month. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Good business decisions come from putting numbers on the options before committing. Run the calculation with your best estimate, then again with a pessimistic one, and see whether the decision survives both. Use the worked example below to check the maths against your own figures.
How the Grow vs Hire Calculator works
A new employee has to be paid out of gross profit, not revenue. At a 40% margin a $60,000 hire needs $150,000 of additional sales just to break even.
Worked example
With the example values (fully loaded annual cost of the hire of $60,000, gross margin of 40%, current annual revenue of $900,000), the extra revenue needed to pay for the hire is $150,000.00; growth required 16.67%, extra revenue per month $12,500.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is extra revenue needed to pay for the hire calculated?
revenue needed = annual cost of the hire ÷ gross margin.
Which figures do I need?
Fully loaded annual cost of the hire, gross margin, current annual revenue. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
How reliable is the result?
As reliable as the estimates you enter. Run the calculation with optimistic and pessimistic inputs to see the range of outcomes before deciding.
