Declare the numerator and align the denominator
staffing cost percentage = (wages + included employer on-costs + included contractor cost) ÷ aligned period revenue × 100
- wages
- Wage cost included in the declared staffing boundary (currency per period) — business record
- included employer on-costs
- User-entered employer costs included consistently; no statutory rate is supplied (currency per period) — business record or user assumption
- included contractor cost
- Contractor spend deliberately included in the staffing definition (currency per period) — business record or user assumption
- aligned period revenue
- Revenue on the same period, currency and tax basis as the cost numerator (currency per period) — business record or user scenario
A user-owned target can be compared in the planner, but it is not an industry benchmark or recommendation.
Ordered definition check
- Set the reporting period, currency and tax treatment. (not complete)
- Declare wage categories included and excluded. (not complete)
- Declare employer on-costs included; use actual records or explicit user assumptions. (not complete)
- Declare contractor treatment consistently across periods. (not complete)
- Align revenue to the same period and basis before dividing. (not complete)
- Separate movement caused by cost, revenue, period or classification. (not complete)
- Compare only with a documented user-owned target or consistent internal baseline. (not complete)
See how definition and period change the ratio
Three engine-derived internal scenarios
These fictional generic currency-unit scenarios are calculated by the Staffing Cost Percentage engine. They are not benchmarks or cost-cutting targets.
| Scenario | Aligned revenue | Declared staffing cost | Staffing-cost rate | Interpretation |
|---|---|---|---|---|
| Wages 300,000 + on-costs 60,000 + contractors 40,000 | 1,000,000 | 400,000 | 40% | Full declared numerator on the aligned annual scenario |
| Same records, contractors excluded from this declared ratio | 1,000,000 | 360,000 | 36% | Different definition produces a different ratio; neither is interchangeable |
| Full numerator with lower but still period-aligned revenue | 800,000 | 400,000 | 50% | Same cost with lower revenue raises the rate without proving inefficiency |
Move from ratio to a bounded staffing decision
| Question | Workflow | Boundary |
|---|---|---|
| What is the rate under this definition and target? | Staffing Cost Percentage Planner | User-entered target, no benchmark |
| How much revenue and contribution corresponds to FTE? | Revenue per Employee Scenario Planner | Not individual performance |
| What would a future role mix cost? | Labour Budget Scenario Planner | Budget, not hiring or legal advice |
Staffing-cost percentage questions
- What is a good staffing-cost percentage?
- Margin101 supplies no universal percentage. Use a consistent internal baseline or user-owned target, then inspect contribution, capacity, service and cash context.
- Should contractors be included?
- Declare the treatment that matches the decision and use it consistently. This guide does not determine employment classification or legal status.
- Does a lower percentage mean higher profit?
- Not by itself. Revenue, other costs, price, mix, output, quality and capacity can change independently. Reconcile the wider contribution and profitability boundary.
Methodology source
- Margin101 Staffing Cost Percentage methodology — Margin101: Exact formula, included inputs, target comparison and no-benchmark boundary.