New Hire Ramp-Up Cost Calculator

A new employee costs full salary from their first day and produces full output a great deal later, and the gap between those two facts is one of the least examined costs in a small business. This page prices it. You describe the productivity curve with three points, being what proportion of full output the person delivers in week one, at the midpoint of the ramp and at full competence, and the calculator interpolates between them rather than assuming steady improvement, because real ramp-ups start slowly and then accelerate. Lost output is then valued against either the revenue the role would generate at full speed or against the employee's own cost, depending on whether the role is billable, and that choice changes the answer by more than double. On top of the lost output sit the two costs of teaching someone: the trainer or supervisor hours, which are real because that person is not doing their own work, and any course fees or licences. The most useful single output is the week at which cumulative value finally overtakes cumulative cost, because it is nearly always later than owners assume and it explains why a hire who leaves at five months has cost far more than the salary they were paid.

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Full Pay From Day One, Full Output Much Later

Every business knows a new person takes time to get going. Very few put a number on it, and the number is larger than the impression.

On the worked example the ramp costs $20,372.00. That is more than three months of the employee's own cost, and it is incurred every single time the role is filled. A business replacing that position twice in two years has spent over $40,000 on ramp alone, entirely separately from recruitment.

Worked Example: Twelve Weeks To Full Speed

A billable hire on $76,000.00, with employer on-costs of 8.1%, costs $82,156.00 a year or $1,579.92 a week. At full speed they generate $3,200.00 a week.

Productivity runs 20% in week one, 60% at the midpoint and 100% by week twelve. Summing the shortfall across those twelve weeks gives $16,000.00 of lost output.

Add 34 hours of trainer time at $58.00, which is $1,972.00, and $2,400.00 of course fees. Total ramp-up cost $20,372.00.

They Turn Net Positive In Week 13

The week-by-week table is the part worth reading closely. Cumulative cost starts at $5,951.92 in week one, because the trainer time and fees are incurred up front alongside a full week's employment cost. Cumulative value starts at $640.00.

The gap widens until week five, where it peaks at $6,938.28, then narrows as productivity climbs. Cumulative value finally overtakes cumulative cost in week 13, one week after the ramp period ends.

That single figure reframes several decisions. A hire who leaves at month four has never once contributed more than they consumed. Judging someone's value at eight weeks is judging them at 68% productivity in the middle of an investment period. And the case for keeping a competent person who is merely unexciting is stronger than it looks, because the replacement restarts this entire curve from zero.

Billable Or Internal Changes The Answer By Half

Mode matters more than any other input on this page.

In billable mode, lost output is measured against the $3,200.00 a week the role would generate, giving $16,000.00. In internal mode it is measured against the employee's own weekly cost of $1,579.92, giving around $7,900.00 for the same twelve weeks.

Neither is wrong. They answer different questions. For a chargeable role, the business genuinely forgoes revenue it could have billed, so the revenue measure is correct. For an internal role there is no forgone invoice, and the conservative statement is that a fully productive employee is worth at least what they cost.

The error to avoid is using the internal measure for a billable role, which understates the cost of slow onboarding by more than half in exactly the businesses where speed matters most. Our Utilisation Rate Calculator covers the billable side in more depth.

Shortening The Ramp Is Cheap And Repeatable

Two weeks off the ramp saves $2,560.00. Four weeks saves $5,120.00.

What buys that is unglamorous and mostly one-off. A written first-month plan so the person knows what they should be able to do by when. Documented process, so the same explanation is not given verbally to every new starter. A designated person to ask, which prevents the pattern of waiting until the manager is free. Recorded walkthroughs of the systems they will use daily.

Each of those costs hours once and then applies to every subsequent hire. On a business hiring five times a year, four weeks off the ramp is worth over $25,000 annually, which comfortably funds doing the onboarding properly.

This Is The Hidden Half Of Turnover Cost

Ramp-up appears inside turnover cost, and it is the component most often omitted because nothing invoices for it.

A business losing five people a year incurs this $20,372.00 five times, which is over $100,000 of cost that appears nowhere in the accounts as a line item. Our Employee Turnover Cost Calculator combines it with recruitment, lost knowledge and leave payouts to give the full annual figure, and our Cost of a Bad Hire Calculator shows what happens when the hire does not survive the ramp at all.

Related NZ Employment Cost Calculators

• True Cost of Employee Calculator: the full annual cost of employing someone.
• Cost Per Hire Calculator: what it costs to fill the role in the first place.
• Employee Turnover Cost Calculator: ramp-up as part of the annual turnover bill.
• Utilisation Rate Calculator: billable capacity once they are up to speed.
• Cost of a Bad Hire Calculator: when they leave before reaching week 13.
• Can I Afford to Hire?: the background to this calculation.
• Should I Delegate or Do It Myself?: the background to this calculation.