Free tool
Payroll percentage of revenue calculator
Payroll as a percentage of revenue is payroll divided by revenue, times 100. It tells you how much of every euro you bring in goes to your team. This calculator works it out, or runs it the other way: pick a target share and see the payroll you can afford. Nothing is stored.
Payroll % of revenue
27.5%
this month
Annual payroll
€198,000
at this month's pace
Left after payroll
€43,500
per month, for everything else
Payroll is taking 27.5% of revenue. The commonly cited planning range is 15 to 30 percent of gross revenue. It is a rule of thumb, not a measured statistic, and labor-heavy service businesses sit structurally above it. The sourced reference figures, and why the range means little without your industry, are below.
Worked example: can we afford one more hire?
A small company brings in €60,000 in a normal month and pays €16,500 in payroll. The calculator opens with these numbers.
payroll % = 16,500 / 60,000 x 100
= 27.5%
left over = 60,000 - 16,500
= 43,500 a month
at a 25% target:
budget = 60,000 x 25%
= 15,000 a monthThe founders want payroll to stay at 25 percent, so they are already €1,500 a month over their own target. Now they want to hire someone at a loaded cost of €5,000 a month. That takes payroll to €21,500, or 35.8 percent of revenue. To bring it back to 25 percent, revenue would need to reach €86,000 a month (21,500 / 0.25).
That does not mean the hire is wrong. It means the hire is a bet that revenue grows by €26,000 a month, and the founders should know how long they can wait for that. Which brings the question back to cash: check it with the cash runway calculator, with the new hire added to money out.
When payroll is bigger than revenue
For a funded startup, payroll above 100 percent of revenue is normal. The team is built ahead of revenue on purpose, and the gap is paid from the money raised. Try €44,000 of payroll on €19,000 of revenue: the share is 231.6 percent, and €25,000 a month comes out of cash.
At this stage the percentage is not a health check against a benchmark. Two other numbers matter more: how many months of runway that gap leaves, and whether the share is falling quarter by quarter as revenue catches up. If it is not falling, each new hire makes the runway shorter without bringing the company closer to paying for itself. The burn rate calculator shows how much of your spend payroll is.
What the benchmarks actually say
The range you will see almost everywhere is 15 to 30 percent of gross revenue. It is repeated by payroll providers and finance writers, but it is a rule of thumb, not a measured statistic. It is a sane starting point for a product business and misleading for a service business, where payroll is the cost of what is being sold.
Figures with a named source point the same way. In its 2024 operations data, the National Restaurant Association put median salaries and wages, including benefits, at 36.5 percent of sales for full-service restaurants and 31.7 percent for limited-service ones. That is above the rule of thumb, in an industry that works as designed. So use the range as a prompt: if you are far outside it, know why. More reference ranges, with sources, are on the benchmarks page.
Payroll or labor cost? Payroll is what people are paid. Labor cost adds employer taxes, social contributions and benefits, which is why labor cost as a share of revenue is always the higher number. Both work in this calculator, as long as you compare like with like. To estimate the loaded cost of one hire, use the employee cost calculator; for a whole team, hourly and salaried staff together, use the labor cost calculator below.
Common questions
How do you calculate payroll as a percentage of revenue?
Divide payroll by revenue for the same period and multiply by 100. €16,500 of monthly payroll on €60,000 of monthly revenue is 27.5 percent. Use the same period for both numbers, and decide up front whether payroll includes employer taxes and benefits.
What percentage of revenue should payroll be?
The range quoted most often is 15 to 30 percent of gross revenue. It is a rule of thumb, not a measured statistic, and it depends heavily on the business. People-heavy businesses sit above it: the National Restaurant Association's 2024 operations data put median salaries and wages, including benefits, at 36.5 percent of sales for full-service restaurants. A good target is one your gross margin can carry with room left for everything else.
Is 50 percent of revenue too much for payroll?
In an agency, consultancy or other service business, not necessarily, because the team is what the client pays for. In a business that sells a product, it usually means prices are too low, the team is too big for current revenue, or revenue has dropped and payroll has not. The trend tells you more than the number.
Does payroll percentage include employer taxes and benefits?
It depends on who is quoting it, which is why comparisons go wrong. Payroll often means gross wages; the loaded figure adds employer taxes, social contributions and benefits on top. Pick one and use it consistently. A loaded number compared with an unloaded benchmark looks worse than it is.
What is the difference between payroll and labor cost?
Payroll is the pay that goes to people. Labor cost is payroll plus everything the employer pays on top: payroll taxes, social contributions, benefits, and in some definitions recruiting and training. For the same business, labor cost as a share of revenue is always higher than payroll as a share of revenue.
How Plainhub tracks team cost against revenue
In Plainhub, the People page holds everyone on the team, employees and contractors, with their monthly cost. It shows total team cost, cost by department and each person's share of your burn. Team cost feeds straight into burn and runway, next to the MRR from your customers. If payroll alone is higher than what you bring in, the People page says so.
Before a hire, you can add it as a draft plan with its monthly cost and see runway before and after, and the month cash would run out, without changing your real numbers. There is no payroll provider or bank to connect: you enter the cost once, and it updates when you change it.
See what the next hire does to your runway
A target share only helps if you notice it slipping. Plainhub keeps team cost, revenue, burn and runway in one live model, so you see the effect of a hire before you make it.