What an Employee or Software Team Really Costs
By Road map ROI, from Cookie Tech, which builds custom software · Published Jun 3, 2026 · Last updated Nov 3, 2026
What changed: Rewritten in plain words, with a full worked example.
Salary is where the cost starts. Know the whole number before you hire.
Costs · ~5 min (est.)
●●●
Full cost = pay × 1.43 (BLS average) + tools + share of a manager + setup time
- Inputs
- Pay per person · Number of people · Tools per person · Manager's share · Setup time
- Output
- Yearly cost of the team, and a cost per person-week
- When to use
- When you are comparing a hire with outsourcing, or pricing work in people's time.
- Replaces
- Comparing a salary with a quote.
When you compare hiring with outsourcing, salary alone makes hiring look cheap. An employee also costs benefits and payroll taxes, tools, a share of someone's time to manage them, and the work your best person stops doing while they get the new team going. This guide adds those up for an example team of four. Replace the numbers with your own.
Benefits and taxes: the one part with a public number
In June 2026, US private employers paid an average of $32.82 an hour in wages and $14.07 in benefits, which include legally required ones, for a total of $46.89 (BLS). That total is about 1.43 times wages. This is an average across all private industry workers in the US, so your own multiple will differ. Our arithmetic, their figures.
The example: a team of four
Everything except the 1.43 is invented, so treat these as blanks to fill in. Four people at $100,000 cost $400,000 in salary and about $770,000 in total, about 1.9 times the salary line. One manager for every 7 people and $10,000 a year in tools per person are our assumptions.
| Cost | How we got it | First year |
|---|---|---|
| Pay, benefits and taxes | 4 × $100,000 × 1.43 | $572,000 |
| Tools and equipment | 4 × $10,000 | $40,000 |
| Share of a manager | 4/7 of $150,000 × 1.43 | $122,571 |
| Your lead's time to get them going | 3 months of $100,000 × 1.43 | $35,750 |
| Total | $770,321 |
What that number lets you do
Divide it down to something you can compare. In this example, a person costs about $3,700 a week ($770,321 ÷ 4 ÷ 52). If an agency quotes you a month of work, or a new feature needs 16 person-weeks, you now have a price to set it against: 16 weeks is about $59,000 of this team's time.
Hire or outsource?
Put the hire in the calculator as $35,750 up front and $61,214 a month (the other three lines above, divided by 12), then add the outside quote as the second option. Add your own hours to each, because managing people and briefing an agency both take your time. The answer depends on those hours and on how long you need the work done.
For product people: the break-even bar
Our rule of thumb, not a study: expect a new team to bring several times its yearly cost in new revenue or saved cost within about 18 months. Set the multiple and the window to match your own board's bar. Once you have a yearly benefit, the Software ROI calculator gives you payback and net present value.
Sources: US Bureau of Labor Statistics, Employer Costs for Employee Compensation, June 2026. Other figures on this page are illustrative or our assumption.