Start from purpose, because “fully loaded” has no single universal boundary
A hiring budget, a project cost, a service-rate floor and a make-or-buy comparison may need different views of labour cost. Begin with annual pay and the employer costs applicable to the actual market and arrangement. Then decide whether equipment, facilities, management and shared services belong in this decision or in a separate overhead view.
Build the inclusion record in layers
- Contractual pay and variable compensation from the current arrangement. (not complete)
- Employer costs and paid-time obligations from current local records or qualified advice—never from this global example. (not complete)
- Role-specific tools, equipment and enablement that the decision would add or remove. (not complete)
- Shared overhead only when the allocation purpose and basis are explicit. (not complete)
- A separate note for excluded costs so a narrow rate is not mistaken for total business cost. (not complete)
Build an annual-to-productive-hour bridge
Prerequisites, sequence and checkpoints
- Name the market and purpose before collecting any employer cost. (not complete)
- Record annual pay and each user-entered employer cost without a global default. (not complete)
- Reconcile paid hours into leave, administration, training, sales, idle time and productive hours. (not complete)
- Add only the explicit overhead allocation relevant to this decision. (not complete)
- Divide the included annual cost by productive hours and compare with the recovery rate. (not complete)
Map inclusions without statutory defaults
| Layer | User record | Boundary |
|---|---|---|
| Pay | Annual contractual pay entered by reader | No wage benchmark |
| Employer costs | Applicable amounts from local records or advice | No global statutory percentage |
| Time denominator | Paid hours less named non-delivery hours | Do not divide by calendar hours |
| Overhead | Explicit decision-specific allocation | Do not hide or double count |
Reconcile a fictional loaded-cost scenario
Reproducible user scenario
Neutral annual CU scenario; every amount is user-entered and is not a local statutory value.
| Step | Input or arithmetic | Decision meaning |
|---|---|---|
| Annual included cost | Pay 72,000 + entered employer costs 9,000 + overhead 15,000 = 96,000 CU | Named inclusion boundary |
| Productive hours | 1,800 paid - 300 non-delivery = 1,500 hours | Decision denominator |
| Loaded hourly cost | 96,000 ÷ 1,500 = 64.00 CU/hour | Cost recovery input, not customer price |
The productive-hour denominator often changes the decision more than one cost line
The example converts 96,000 CU of included annual cost into 64 CU per productive hour using 1,500 hours. Dividing by all 1,800 paid hours would show 53.33 CU per paid hour, but that figure cannot recover the same annual cost through productive work alone. Both figures can be true; they answer different questions.
| Decision use | Denominator | Mistake to avoid |
|---|---|---|
| Annual employment budget | Annual included cost; no hourly denominator required | Calling the total a customer price |
| Delivery or job cost | Productive hours attributable to delivery | Treating leave, training and administration as available delivery time |
| Service-rate recovery | Feasible billable hours after productive non-billable work | Using every productive hour as sellable |
| Local statutory case | Current locally sourced inclusions and hours | Importing a percentage from another market |
Limitations, evidence and next action
Use the calculation owner for the next step
- Labour Recovery Rate Planner
Set a charge-out rate from productive hours and loaded labour
- Service Rate & Quote Planner
Set a viable rate and project quote
Reconcile salary to the employee-cost boundary used by the decision
Salary is one contract amount, not a universal total employee cost. Start from salary, add only employer costs that apply to the actual market and arrangement, add role enablement that this decision creates, and keep any shared-overhead allocation explicit. Record exclusions so a narrow hiring budget is not mistaken for a complete recovery rate.
| Cost layer | Entered amount or calculation | Evidence and boundary |
|---|---|---|
| Contractual salary | 72,000 CU/year | User-entered current arrangement; not a wage benchmark |
| Applicable employer costs | 9,000 CU/year | Locally verified entered total; no percentage supplied |
| Role enablement | 6,000 CU/year | Entered equipment, systems and training included once |
| Selected employee-cost total | 72,000 + 9,000 + 6,000 = 87,000 CU/year | Decision total before any separately justified shared overhead |
| Productive-hour view | 1,800 paid − 300 named non-delivery = 1,500 hours; 87,000 ÷ 1,500 = 58.00 CU/hour | A cost-recovery input, not customer price or take-home pay |
Carry the selected boundary into the calculation owner
- Labour Recovery Rate Planner
Set a charge-out rate from productive hours and loaded labour
- Labour Budget Scenario Planner
Translate role headcount, active months, compensation, contractor and overtime assumptions into a period labour budget
Questions and boundaries
- Is loaded labour cost the customer rate?
- No. It is a cost-recovery input before contribution, risk and commercial pricing decisions.
- Which employer rates should I use?
- Use current amounts applicable to the relevant jurisdiction and arrangement; this global guide supplies none.
Sources and scope
- Basic cost behaviour patterns — OpenStax: Supports fixed, variable and mixed-cost concepts within a stated activity range.