The Real Cost Of Employment

The Real Cost of Employment: Is Hiring a Full-Time Salesperson Costing You More Than You Think?

When businesses decide to expand their sales force, they face a critical financial decision:

• Hire a full-time salaried salesperson with all the associated overheads, or

• Retain an independent freelance consultant with flexible costs.

At first glance, a full-time hire might seem like the obvious choice, but once you unpack the hidden costs, the numbers tell a different story. Below, we break down the real cost of hiring an employee on a $100,000 per annum salary plus a leased company vehicle—and explore why outsourcing might be the smarter move.

1) The Hidden Costs & Risks of Full-Time Employment

A salaried salesperson doesn’t just cost their base wage—there are multiple additional expenses that most business owners don’t factor in upfront.

1.1 High Fixed Costs & Financial Commitment

A full-time employee represents a locked-in financial obligation, regardless of business performance. Whether sales are booming or slow, their salary, benefits, and associated costs remain constant, which can strain cash flow during off-peak seasons or economic downturns.

1.2 Employment Overheads: What’s Not in the Salary?

Beyond their wage, additional expenses include:

• Recruitment and onboarding costs such as recruitment fees, police and medical checks, and initial training.

• Paid time off, including public holidays, annual leave, sick leave, and personal days.

• ACC levies and other mandatory employer contributions.

1.3 Compliance, Admin & HR Burden

Hiring comes with ongoing administration—processing payroll, managing tax filings, and ensuring compliance with health and safety regulations. This increases pressure on HR, accounting, and administration teams, adding hidden costs in time and resources.

1.4 Fringe Benefit Tax (FBT) and the True Cost of a Company Car

Providing a company vehicle significantly increases employment costs due to Fringe Benefit Tax (FBT), which applies when a car is available for personal use.

• Estimated FBT on a $50,000 vehicle: $4,925 per year

• Total estimated vehicle-related costs: $25,885 per year

1.5 Limited Flexibility

Unlike a freelance consultant, a full-time hire is not scalable.

• If sales needs fluctuate, businesses pay for staff who may not be fully utilized.

• If market conditions change, reducing headcount may come with severance costs or redundancy obligations.

1.6 Training & Turnover Risks

• Hiring a full-time salesperson requires significant investment in training and development.

• If they resign after a few months, the business must restart the recruitment cycle, incurring further costs while losing valuable knowledge to a competitor.

2) The True Cost of Hiring a Salesperson at $100,000 P.A. + Company Vehicle

Many businesses underestimate the actual cost of a full-time hire. Below is a breakdown of what a $100,000 salary really costs when including benefits, taxes, and vehicle expenses.

2.1 Salary & Benefits Breakdown

• Base Salary: $100,000

• Employer Contributions to KiwiSaver (3%): $3,000

• Total Salary-Related Costs: $103,000

2.2 Vehicle Costs (Annual Breakdown)

• Lease Cost of Vehicle: $12,000 ($1,000/month)

• Fringe Benefit Tax (FBT): $4,925 (estimated for a $50,000 vehicle)

• Insurance, Fuel & Maintenance: $8,930

• Registration & Road Taxes: $500

• Total Vehicle Costs: $25,885

2.3 Additional Business Expenses

• ACC Levies (Work Levy - Employer Contribution): $630

• Work Equipment (Mobile Phone, Laptop, etc.): $3,000

• Training & Development: $2,000

• Total Additional Costs: $5,630

Total Cost of Employment Per Year

• Salary and Benefits: $103,000

• Vehicle Costs: $25,885

• Additional Costs: $5,630

• Grand Total: $134,515 per annum (excluding HR/Admin support costs)

3) The Cost Per Workable Day

Employees do not work 365 days a year.

• After subtracting public holidays, weekends, annual leave, and sick days, there are only 221 workable days per year.

• Cost per day: $608.67 per workable day.

• This is the cost to the business before generating a single dollar in sales.

4) The Alternative: Freelance Sales Consultants

For many businesses, outsourcing sales and account management provides the same benefits—without the financial and administrative burden. Below is a comparison.

Cost Factor Full-Time Employee vs Freelance Consultant: Base salary $100,000 vs flexible (per contract), KiwiSaver (3%) $3,000 vs self care by Consultant, company car + FBT $25,885 vs self care by Consultant, Admin & HR Costs - ongoing costs vs self care by Consultant, attrition - a cost to Employer vs specialist skills from 1st day with Consultant, limited flexibilty (fixed salary costs for Employer) vs scalable with Consultant (as required).

5) When Does Hiring a Freelance Consultant Make Sense?

• When a business needs flexibility and cannot commit to a full-time salary.

• When business owners want results without payroll burdens such as ACC levies, KiwiSaver, and FBT.

• When hiring full-time carries high financial risk.

• When sales cycles are seasonal or inconsistent.

• When an experienced salesperson is needed immediately without long onboarding periods.

For many small and medium businesses, a freelance consultant provides the same expertise at a fraction of the cost, while larger businesses can use consultants to cover temporary staffing needs such as parental leave or extended sick leave.

6) The Smart Business Decision

The decision between hiring full-time and outsourcing sales comes down to:

• Long-term business objectives

• Financial flexibility

• Operational efficiency

For many businesses, outsourcing sales functions provides the best balance between growth and cost management.

Find Out How AM Associates Can Help

AM Associates offers flexible, outsourced sales and account management solutions, providing all the benefits of an experienced salesperson—without the long-term overheads. To discuss your sales needs, book a consultation today.

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