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How this calculator works
Employee annual cost = salary × (1 + tax rate + benefits rate). Contractor annual cost = hourly rate × hours per week × 48 weeks. AI annual cost = monthly cost × 12 + setup cost. AI effective capacity adjusts for how much of the work AI can realistically handle.
Useful scenarios
- A YouTuber needing 20h/week of editing — comparing a $45k part-time editor (with 15% taxes + 15% benefits), a $35/h freelance editor, and a $30/month AI editing tool.
- A creator needing 10h/week of social media management — vs a $30k part-time VA, a $25/h freelance social media manager, and a $20/month AI scheduling + content tool.
- A consultant needing 15h/week of research and report drafting — vs a $50k junior analyst, a $50/h research contractor, and a $50/month AI research assistant.
FAQ
Does the cheapest option always make sense?
No. Cost is one factor. Employees offer reliability, commitment, and cultural fit. Contractors bring specialized expertise. AI tools are fast and cheap but may lack judgment, creativity, and reliability. Use this as a cost baseline, then weigh non-monetary factors.
What overhead costs should I include for an employee?
Include payroll taxes (7.65–15% depending on location), health insurance ($400–800/month), retirement contributions (3–5%), paid time off, equipment ($1,000–3,000/year), training, and management time. The 15% tax + 20% benefits default is conservative for US-based hires.
How do I estimate AI effectiveness accurately?
Be honest about what AI can and cannot do. AI handles ~50% of content creation work (drafts, research, outlines) but needs human editing. For data analysis or coding, AI may handle 80% with oversight. For client-facing roles or creative strategy, full replacement is rare.