MarginWorkshopStaffing
Hire vs. Overtime / Second Crew Break-Even
When a demand spike hits, is it cheaper to pay overtime or bring on a hire (or a whole second crew)? See the real crossover, not a gut call.
Hire (or stand up a second crew)$35,800 total
Total overtime cost$50,700
Total hire cost (1 hire)$35,800
Capacity added40 hrs/wk
Sensitivity to expected duration
| Scenario | Overtime total | Hire total | Strategy |
|---|---|---|---|
| Duration -20% | $40,560 | $29,040 | Hire (or stand up a second crew) |
| Duration -10% | $45,630 | $32,420 | Hire (or stand up a second crew) |
| Base case | $50,700 | $35,800 | Hire (or stand up a second crew) |
| Duration +10% | $55,770 | $39,180 | Hire (or stand up a second crew) |
| Duration +20% | $60,840 | $42,560 | Hire (or stand up a second crew) |
Methodology
Formula: total overtime cost = coverage gap hours × loaded rate × overtime multiplier × (1 + burden) × duration. Total hire cost = one-time hiring cost + (hires needed × hours per hire × hire rate × (1 + burden) × duration). The strategy is classified by the percentage gap between the two.
Assumption: "hire" can mean one new worker or an entire second crew, the math is the same either way, hours per hire just represents one hire-unit's weekly hours.
Limitation: doesn't account for training ramp-up time for a new hire, or the risk of a demand spike ending earlier or later than expected.