Guide

How much revenue you need before hiring your first tech

Most owner-operators price the wage and forget the rest. Here's the maths on loaded cost, the coverage ratio you actually need to hit, and the cash buffer to hold before you make an offer.

The wage is not the cost

You've quoted a helper $25 an hour. That is not what they cost you. On top of wages you're carrying:

• Employer payroll tax (FICA): 7.65% of wages, fixed and non-negotiable.
• FUTA/SUTA (unemployment insurance): typically 1-3% of wages depending on your state and claims history.
• Workers' comp: in office jobs this is under 1%. In the trades it's 3-8% of payroll, sometimes higher for roofing or tree work. Get a quote for the actual job class before you assume anything.
• Phone, tools, PPE, uniforms: a few hundred dollars a month once you spread it across the year.
• Van costs: fuel, insurance rider, maintenance, if they need their own vehicle rather than riding with you.

Add it up and a $25/hr wage typically lands at $31-$35/hr loaded, once payroll taxes, workers' comp and overheads are folded in. That's the wage multiplied by roughly 1.25 to 1.4, depending on your state's rates and your trade's comp classification. Confirm your exact percentages with your accountant or payroll provider before you build the offer — they vary a lot by state and by job class.

Worked example: a $25/hr helper

Item	Rate / rule of thumb	Annual cost (2,080 paid hrs)
Base wage	$25.00/hr	$52,000
FICA	7.65%	$3,978
FUTA/SUTA	~2%	$1,040
Workers' comp (trades)	~5%	$2,600
Phone, tools, PPE	~$150/mo	$1,800
Van share	~$300/mo	$3,600
Total loaded cost	~$33/hr	~$65,000-$68,000/yr

A $25/hr wage becomes roughly $33/hr loaded, or around $65,000-$68,000 a year. That's the true cost of the seat, before they've billed a single hour.

Why loaded cost alone doesn't tell you the answer

A new hire in year one does not bill 100% of their paid hours. Between training, drive time, callbacks, slow ramp-up and the days they simply aren't productive yet, most first-year techs bill 60-65% of paid hours. So if you're paying for 2,080 hours, you're realistically getting 1,250-1,350 billable hours out of them. That means your pricing has to cover the loaded cost on far fewer hours than you're paying for. To make the hire profitable — not just break-even, but actually worth the risk and the management time — the role needs to generate roughly 2.5 to 3 times its loaded cost in incremental revenue. This is the coverage test. It accounts for the lost hours, your overhead, and a margin that makes the whole exercise worthwhile rather than just moving cost around.

Running the coverage test on the $25/hr helper

Loaded cost: ~$68,000/year. Apply the 2.5-3x coverage multiple:

• 2.5x → $170,000 of incremental revenue needed
• 3x → $204,000 of incremental revenue needed

So the honest answer to "how much revenue do I need before hiring my first tech" is: $170,000-$200,000 in new, additional revenue that this hire will generate — not your total business revenue, and not revenue you're already booking without them. If you're already turning down $150,000 a year in jobs because you're the bottleneck, that's your signal. If you're hoping the hire will help you find the work, the maths doesn't support it yet.

Run your own numbers through a hiring cost calculator before you commit — it's quicker than doing this by hand every time your wage assumption changes.

The 90-day cash buffer rule

Even if the annual maths works, the first three months don't. A new hire is cash-negative for roughly 6-10 weeks: you're paying full wages while they're only billing 40-50% of hours during onboarding, and invoices from any new work they generate take another few weeks to land as cash. Before the start date, hold a cash buffer of three months of loaded cost in the bank, separate from your normal operating reserve. For the $68,000/year example, that's:

$68,000 ÷ 12 × 3 ≈ $17,000

If you don't have that sitting in the account (not projected, not "coming in next month" — actually sitting there), you're not ready to hire, even if the annual revenue case looks solid. This buffer is what stops a slow month from forcing you to lay someone off in week 8, which costs you more in wasted training and reputation than waiting another quarter would have.

Check your own numbers before you commit

The figures above use a $25/hr wage and mid-range trade workers' comp. Your numbers will move if:

• Your workers' comp classification is higher risk (roofing, tree work, excavation often run 8-15%)
• Your state has higher SUTA rates or additional payroll levies
• You're supplying a fully-equipped van versus a tool allowance
• Your first-year ramp is slower than 60-65% billable, which is common if you don't have a structured onboarding process

Before you set the hire's target, make sure your own hourly rate already covers your overhead and margin — if your rate is too thin, no amount of coverage-ratio maths will make a second body profitable. It's also worth running your current numbers through a break-even calculator to see exactly how much revenue growth is real headroom versus revenue you need just to stand still.

What to do with this before you hire

1. Calculate your true loaded cost — wage x 1.25-1.4, using your actual state and comp class rates.
2. Multiply loaded cost by 2.5-3x to get your revenue threshold.
3. Check that threshold against work you're currently turning away, not work you hope to win.
4. Bank three months of loaded cost as a start-date buffer, kept separate from operating cash.
5. Build a simple 90-day onboarding plan so the ramp to 60-65% billable happens as fast as it can.

If you want a structured way to work through payroll setup, onboarding checklists and the paperwork that comes with your first employee, the small business operations kit covers the practical side once the numbers say go.