Back to Employee Cost Calculator

Employee Cost Calculator — Default Values

We used default values that are typical of software development firms in Southern California. Many of these parameters vary widely with geographic location, industry, and individual company culture. In all cases, we've attempted to use conservative values for defaults.

The 18% employee burden ratio is comprised of payroll taxes, workers compensation insurance, medical and dental insurance, and other common employee benefits. As health care costs rise, this number is likely to rise as well.

The 25% placement fee is about in the middle of the range charged by professional staffing firms. We've seen numbers as low as 15% and as high as 33%. The $5000 relocation allowance is simply an educated guess. The average term of employment varies widely. 3 years is a reasonable, maybe even generous, estimate on average. You could use 10-15% if your job search is performed internally. That should cover costs of HR revieiwng and culling resumes, and candidate follow-up. It would also include the cost of advertising

The $100 / month hardware allowance is based on a 3 year lease of a high-end Dell system. The $1200 annual allowance for software is based on licenses and upgrades to MS Office, MS Developer Studio, and a reserve for other development tools and utilities.

$2.50 per square foot is typical of office leases in a Western US major city.

Education and training expenses vary widely with individual companies. Some companies send their developers to important trade shows in their industry. Others send them to professional conferences like the Software Development Conference or Embedded Systems Conference. Others do both. We've assumed travel to and attendance of a 1 week professional conference plus several local trade shows / training seminars.

In the utilization section, the default gross number of hours comes from 52 weeks multiplied by 40 hours per week. We've assumed 2 weeks of paid vacation, 10 paid holidays, and 5 personal days. We've assumed that the employee will miss 10 work days attending trade shows and training seminars and that 10% of his or her time will be lost to non-productive overhead like installing and troubleshooting software, reading personal emails, web browsing, chatting at the "watercooler", and attending non-technical meetings. The final parameter, project downtime, is an estimate of the time developers spend in between projects. We've used 10% as a default, but this number varies widely with individual companies.

Back to Employee Cost Calculator