Hiring Trigger Calculator

A common rule of thumb is that you can afford a hire when the total cost of the role is less than 25% of your monthly revenue and you maintain at least 6 months of runway after the hire. Also consider whether the hire will directly generate revenue or reduce costs. If the hire has a payback period under 6 months, the financial case is strong. Read more about the decision in our guide on when to hire your first employee as a solo founder.

Include base salary, employer payroll taxes (typically 7.65% for FICA in the US), health insurance, retirement contributions, equipment and software licenses, recruiting costs amortized over expected tenure, and any training or onboarding expenses. A common estimate is that total cost is 1.25x to 1.4x the base salary. Use our employee cost calculator for a detailed breakdown.

Aim for at least 12 months of runway after the hire for a safe hiring decision. Between 6 and 12 months is manageable if the hire is revenue-critical. Below 6 months is risky and you should consider contractors or part-time options instead. If you are venture-funded, your investors may have specific runway expectations tied to your next fundraise timeline.

Outsource when the work is project-based, does not require deep institutional knowledge, or when your runway is tight. Hire when the role is ongoing, core to your product, and requires ramp-up time that makes frequent contractor turnover expensive. A contractor at $100/hr for 20 hours/week costs $8,700/month, which may exceed a full-time equivalent. Compare both options with our contractor vs. employee calculator.

Plan for the downside scenario by running this calculator with $0 expected revenue impact. If your runway is still above 6 months in that case, you can absorb the risk. Set clear 90-day milestones for the hire and have a decision point at 3 months. Consider a probation period or performance-based compensation structure to reduce risk. For more on navigating this stage, read about the $5K-$15K MRR danger zone.