How to Calculate Overtime Cost
What is Overtime Cost?
Calculates the expense of overtime hours including premium pay, benefits, and fatigue-related costs. Determines when hiring is more cost-effective.
Step-by-Step Guide
- 1Calculate base hourly rate and overtime multiplier (typically 1.5-2×)
- 2Multiply overtime hours by overtime rate
- 3Add secondary costs (fatigue accidents, quality issues)
- 4Compare to hiring permanent employee cost
Worked Examples
Input
$25/hr, 10hrs OT
Result
$375
Common Mistakes to Avoid
- ✕Only counting premium pay, ignoring quality and safety costs
- ✕Not accounting for fatigue-related productivity loss
Frequently Asked Questions
When is overtime cheaper than hiring?
Temporary needs: overtime is cheaper; permanent needs: hiring permanent staff is usually cheaper within 6-12 months.
What's the actual cost of overtime?
Premium pay plus hidden costs: reduced quality, safety risks, employee burnout, increased absenteeism.
Ready to calculate? Try the free Overtime Cost Calculator
Try it yourself →