# Hiring your first employee: what it really costs > The wage on the offer letter is the smallest number in the whole deal. Here's everything else that rides along with your first hire, and how to know you can afford it before you sign. Source: https://toolbagcrm.com/blog/hiring-your-first-employee-what-it-really-costs/ Author: The Toolbag Crew Updated: 2026-10-13 The wage is the cheapest part. Budget the full loaded cost before you make the offer. You finally decide to hire. You work out what you can pay somebody, maybe twenty-five an hour, and that number rattles around your head for weeks. Here’s the part that catches most people flat: the hourly wage is the cheapest thing about an employee. By a lot. The true cost of that first hire runs well past what shows up on the offer letter, and the shops that get burned are the ones who only budgeted for the wage. ## The wage is the smallest number Say you hire somebody at twenty-five an hour. Full time, that’s around fifty-two thousand a year in straight wages. Feels like the whole cost, right? It isn’t close. Most of what an employee actually costs you gets stacked on top of that number, invisible until the bills start landing. There’s a rule of thumb that’s floated around the trades for years: a full-time employee runs you somewhere between **1.25 and 1.4 times their wage** once everything’s added in. On a fifty-two thousand dollar wage, that’s another thirteen to twenty grand a year you never quoted yourself. ## The costs that hide behind the wage So where does it go? Start with payroll taxes. The employer side of Social Security and Medicare, plus unemployment, comes straight out of your pocket on top of the wage. Then workers comp, and in the trades that premium is no joke, because it’s priced on how dangerous the work is and how much you’re paying out. Add the stuff you hand somebody to do the job: tools, a phone, uniforms, a spot in the truck or a truck of their own down the line. Bump your general liability too, because another body on the job is another way something goes sideways. None of it is optional, and none of it was on the offer letter. ### What rides along with the wage - **Payroll taxes**: The employer share of Social Security, Medicare, and unemployment, on top of the wage. - **Workers comp**: Priced on your trade's risk and your payroll. In the trades it adds up fast. - **General liability**: Another body on the job usually means a higher premium. - **Tools and gear**: Hand tools, a phone, uniforms, and eventually a spot in the truck. - **Ramp-up time**: Full wage for partial output while they learn your shop. ## The cost nobody warns you about Here’s the one that blindsides people. A new hire is slow at first. For the first few weeks, maybe the first couple of months, they’re learning your trucks, your customers, the way you like things done. You’re paying full wage for half the output, and worse, you’re off the tools yourself showing them the ropes instead of billing hours. That ramp-up is a real cost and it’s the one that doesn’t show up on any spreadsheet. Plan for a stretch where the new person costs more than they bring in. It’s normal. It’s also why you want to hire before you’re drowning, not after, so you’ve got room to train somebody right. ## When you can actually afford it The plain test: can this person pay for themselves, with margin left over? One full-time tech, worked right, should bill out at a healthy multiple of what they cost you. If you’re turning away work, running yourself ragged, and the phone keeps ringing, you’re probably past due. If you’re hiring on a hunch that things might pick up, slow down. Run the full loaded number against the extra revenue you’re confident that person brings in, not the wage. If the math only works when every week is your best week, it doesn’t work. > The wage is the cheapest thing about an employee. Budget for the rest or the rest budgets you. ## The one bill that shouldn't go up when you hire Adding your first employee to ToolbagCRM does not add a per-seat fee. Free and Founders include unlimited users. Plug-in slots on Free, optional add-ons, and card payment fees can still change the total software bill, so budget for the tools and transactions you actually use. Free and Founders include unlimited users. [See plan terms, plug-in slots, and payment fees.](https://toolbagcrm.com/pricing/) - [get started](https://app.toolbagcrm.com/) - [HVAC CRM](https://toolbagcrm.com/crm-for-hvac/) - [Plumbing CRM](https://toolbagcrm.com/crm-for-plumbers/) - [Electrician CRM](https://toolbagcrm.com/crm-for-electricians/) - [Landscaping CRM](https://toolbagcrm.com/crm-for-landscapers/) - [Roofing CRM](https://toolbagcrm.com/crm-for-roofers/) ## Frequently asked questions ### How much does it really cost to hire your first employee? Budget 1.25 to 1.4 times the wage once payroll taxes, workers comp, insurance, tools, and a phone are added in. On a $52,000 wage that's another $13,000 to $20,000 a year beyond what's on the offer letter. ### What hidden costs come with a first hire in the trades? The employer side of payroll taxes, workers comp premiums, a bump to your general liability, plus tools, a phone, uniforms, and eventually truck space. Ramp-up time is the biggest one people miss, since a new hire is slow for the first weeks. ### How do I know if I can afford to hire someone? Run the full loaded cost, not the wage, against the extra revenue you're confident that person adds. If the math only works on your best week, you can't afford it yet. ### Does adding an employee increase my software costs? It depends on the tool. Per-seat CRMs charge more every time you add a user, while a flat-rate CRM like ToolbagCRM keeps the same price no matter how many people you hire. ## Related resources - [When to buy your second truck: the real cost](https://toolbagcrm.com/blog/when-to-buy-your-second-truck-real-cost/) - [Getting off the tools: hiring your first office manager](https://toolbagcrm.com/blog/getting-off-the-tools-hiring-first-office-manager/) - [How to pay techs: hourly, salary, commission, or a mix](https://toolbagcrm.com/blog/how-to-pay-techs-hourly-salary-commission-or-mix/) - [No per-seat pricing: what it means and why it matters](https://toolbagcrm.com/blog/field-service-crm-no-per-seat-pricing/) - [Founders pricing](https://app.toolbagcrm.com/)