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Is overtime cheaper than hiring?

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Numbers to enter
Compare the same extra workload using the overtime rate that actually applies to your employee and the fully-loaded hourly cost of additional hire capacity.
hrs/wk
$

Use the wage/cost base that your actual overtime entitlement or policy applies to.

×

Enter the multiplier that actually applies to these hours. MarginKoala does not assume one.

$

Include employer-side costs that genuinely scale with the extra hire capacity. Fixed recruitment/equipment costs are not included in this simple weekly comparison.

Koala's Calculated Result
Incremental weekly cash cost for the same extra hours.

Enter the extra hours, the overtime base and multiplier that actually apply, and the fully-loaded incremental hire cost.

MarginKoalaKoala's Professional Opinion

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Frequently asked questions

When is overtime cheaper than hiring?

When the per-week overtime bill is below the per-week fully-loaded cost of a new hire, and the work doesn't require ramp or full-time capacity. Below that line — keep overtime; above it — hire a new FTE.

Overtime vs New Hire

What is the right overtime multiplier?

Common 1.5× for >40 hours/week; 2.0× for night/holiday work. The per-hour cost should reflect both the multiplier and any new-burden-on-existing-staff side effects (errors, quality dips, fatigue).

Overtime vs New Hire

When does overtime get expensive vs. a new hire?

When the additional per-week work requires sustained overtime (more than ~3 weeks), any holiday-shift pay kicks in, or the per-week beat is higher than a per-fully-loaded-week FTE cost. Plan for the steady-state comparison, not the worst week.

Overtime vs New Hire

Should I price in retention cost?

Use the calculator result for the inputs entered and keep any market-response or operating recommendation separate from the deterministic calculation. Support that additional assumption with the business’s own evidence or an explicitly labelled scenario.

Overtime vs New Hire

Educational use, not financial advice. Numbers are estimates for planning; consult a qualified professional before acting on them.