Before you send an offer, turn the salary into the amount that will actually leave your account each month, then divide your cash by the new burn. For a £60,000 engineer in the UK that monthly amount is about £5,950 rather than £5,000, and at a company burning £28,000 a month on £420,000 of cash, the hire takes runway from 15 months to about 12.
The rest of this post builds that figure one line at a time, so you can redo it with your own salary, country and bank balance.
Start from the offer letter
The offer says £60,000 a year. That is £5,000 a month, and it is the only number the candidate sees. Your bill has more lines on it.
| Line | How it is worked out | Per year | Per month |
|---|---|---|---|
| Salary | From the offer | £60,000 | £5,000 |
| Employer National Insurance | 15% of pay above £5,000 | £8,250 | £687.50 |
| Workplace pension, employer minimum | 3% of earnings between £6,240 and £50,270 | £1,320.90 | £110.08 |
| Software seats and tools | Your own stack; £150 a month here | £1,800 | £150 |
| Recurring total | £71,370.90 | £5,947.58 |
The employer National Insurance rate and the £5,000 secondary threshold are HMRC's figures for the 2026 to 2027 tax year (GOV.UK, rates and thresholds for employers). The 3% employer minimum and the £6,240 to £50,270 earnings band come from the auto-enrolment rules (GOV.UK, workplace pensions). Your pension scheme may define earnings differently or pay more than the minimum, so check it.
This hire costs 1.19 times salary every month, before anything one-off. In the US the statutory floor is lower: the employer pays 6.2% Social Security on wages up to $184,500 in 2026 and 1.45% Medicare on all wages (IRS Topic 751), with unemployment taxes and any health insurance you offer on top. Every country has its own lines. Find the statutory ones on your tax authority's site, then add your own tools.
Then come the costs you pay once:
- A laptop and setup, £1,800 in this example.
- An agency fee, if you use a recruiter. This example uses 15% of salary, £9,000, as an input; your contract sets the real figure.
That is £10,800 gone from the bank before the first payslip.
Divide the cash by the new burn
The company in this example has £420,000 in the bank and spends £28,000 a month more than it brings in.
| Before the hire | After the hire | |
|---|---|---|
| Cash | £420,000 | £409,200 (after £10,800 of one-offs) |
| Net burn | £28,000 | £33,948 |
| Runway | 15.0 months | 12.1 months |
runway = (cash - one-off hiring costs) / (net burn + loaded monthly cost)
= (420,000 - 10,800) / (28,000 + 5,948)
= 12.1 months
One person costs this company three months of runway. That can be the right trade, and it should be made with this table open.
If you plan in euros or dollars, the employee cost calculator takes a salary, an employer tax rate, benefits, equipment and recruiting, and gives the loaded monthly cost. It uses a flat tax rate, so for a threshold-based system like the UK's, enter the effective rate: £8,250 divided by £60,000 is 13.75%.
What the hire has to earn back
A hire that is meant to pay for itself needs a target, and the target is bigger than the salary. To put runway back where it was, the role has to produce about £5,950 a month of extra gross profit, or save that much somewhere else.
For a SaaS company with an 80% gross margin, that means £5,948 / 0.80, or about £7,435 of new monthly recurring revenue. At an average of £400 a month per customer, that is 19 new customers. Then ask by which month this person could plausibly have added 19 customers, or shipped the thing that wins them. Every month before that date is paid at full price.
Some roles never pay back this directly. A support hire who keeps churn down, or an engineer who fixes the part of the product sales is stuck on, can still be the right call. Write down which kind of hire this is before you make the offer, because "we'll see" turns into a year of payroll quickly.
Where the estimate usually goes wrong
Using the average cost of your team instead of the cost of this hire. The UK Employment Allowance lets eligible employers take up to £10,500 off their employer National Insurance bill in 2026 to 2027 (GOV.UK). A company with two or three staff may pay little or no employer NI today, so its current payroll looks cheap. Once the allowance is used up, each new hire pays the full 15%. It also has eligibility rules: a company whose sole director is the only employee paying secondary NI cannot claim it (GOV.UK, Employment Allowance eligibility).
Treating the start date as the cost date. Recruiting fees, equipment and notice periods fall before day one. If you agree a hire who starts in three months, the one-offs may already be paid while the salary has not started, and your runway should show both.
Losing the loaded cost after the offer is signed. The salary goes into payroll software. The pension, the NI and the extra seat end up in three other places, and six months later nobody can say what the team costs. Record the loaded figure against the person.
Before you send the offer
- Build the table above with your own salary and your country's employer costs.
- Add the one-offs and take them off cash.
- Divide to get the new runway, and decide whether you can live with it.
- Write down what the hire has to produce, and by when.
In Plainhub, the People page holds one monthly cost per person, so enter the loaded £5,948 rather than £5,000; the page then shows team cost by department and its share of burn. A hire can sit on the Plans page as a draft first. The draft shows runway before and after without touching your live numbers, and once you commit it, the cost joins your burn from its start date. If you only need the arithmetic, the payroll percentage calculator shows what the hire does to payroll as a share of revenue, and when will I run out of cash covers the runway date itself.