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Payroll percentage of revenue calculator

What share of revenue your payroll takes — or, run the other way, the payroll a target share allows you to carry. Nothing stored.

The question
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 — 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.

The formula, both directions

payroll % of revenue = monthly payroll / monthly revenue x 100
payroll budget       = monthly revenue x target %

The forward direction describes the present; the reverse direction is the one that prevents mistakes. Deciding a target share first and deriving the payroll budget from it turns “can we afford another person” from a feeling into arithmetic — and the budget has to hold in a normal-to-weak month, because revenue flexes and payroll does not. What one specific hire adds to the payroll side, fully loaded, is the employee cost calculator's job.

What the benchmarks actually say

The range quoted almost everywhere is 15 to 30 percent of gross revenue. It is worth knowing what that range is: a rule of thumb that payroll providers and finance writers repeat, not a measured statistic with a study behind it. It is a sane starting point for a product business and misleading for a service one, where payroll is the cost of the thing being sold. The figures that do carry a named source point the same direction: the National Restaurant Association's 2024 Restaurant Operations Data Abstract put median salaries and wages including benefits at 36.5 percent of sales for full-service restaurants and 31.7 percent for limited-service — comfortably above the rule of thumb, in an industry that is functioning as designed.

So use the range as a prompt, not a verdict: if you are far outside it, know why. A consultancy at 45 percent has a business model; a shop at 45 percent has a problem. The reference ranges for the other numbers founders track — runway, churn, burn multiple and the rest — are collected with their sources on the benchmarks page.

One definitional trap to avoid: decide whether your payroll figure is gross pay or the loaded cost with employer taxes and benefits, and keep it consistent. The loaded version — the true labor cost — is typically 20 to 30 percent higher, and the labor cost calculator computes it for a whole team, hourly and salaried staff together.

Common questions

What percentage of revenue should payroll be?

The commonly cited planning range is 15 to 30 percent of gross revenue, but it is a rule of thumb, not a measured statistic, and it means little without your industry. Labor-heavy service businesses sit structurally 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. Product and software businesses often sit below it. The defensible target is one your gross margin can carry with room for everything else.

What percentage of revenue should payroll be for a small business?

The same logic applies at any size: it depends on whether people are the product. A small consultancy paying its consultants 50 percent of revenue may be perfectly healthy, because payroll is its cost of goods. A small shop at 50 percent is usually in trouble. Compare against your own industry and your own trend, not a universal number.

Is 50 percent of revenue too much for payroll?

In a people business — agencies, consultancies, professional services — not necessarily, because the payroll is what the client is buying. In a business that sells products, it usually means pricing is too low, staffing is too high for the revenue, or revenue has fallen and payroll has not followed. The test is what remains: after payroll, rent, materials and everything else, is there margin left, and is the share rising or falling over time.

Does payroll percentage include employer taxes and benefits?

It depends on who is quoting it, which is exactly why comparisons go wrong. Payroll usually means gross wages and salaries; the loaded figure adds employer payroll taxes and benefits on top, often 20 to 30 percent more. Whichever you use, use it consistently — a loaded number compared against an unloaded benchmark will look worse than it is.

What is the difference between payroll and labor cost?

Payroll is the gross 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. Labor cost as a share of revenue is therefore always higher than payroll as a share of revenue for the same business.

A target share only works if you see it slipping

Plainhub keeps payroll and revenue in one live model, so the share updates the day a hire starts or a slow month lands — not the night before you next open the spreadsheet.

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