Use the **Virtual Assistant Cost Savings Calculator** to quickly estimate the annualized financial benefit of hiring a remote virtual assistant (VA) compared to an equivalent full-time in-house employee (FTE). This tool factors in salary, overhead, and utilization hours to provide a clear cost comparison.
Virtual Assistant Cost Savings Calculator
Annual Estimated Savings:
Virtual Assistant Cost Savings Formula
The calculation is based on comparing the total effective hourly rate of a traditional employee against the VA’s cost for the same amount of annualized work hours.
1. FTE Effective Hourly Rate ($):
$ FTE\_HR = (FTE\_Salary / 2080) \times (1 + FTE\_Overhead / 100) $
2. Annual Savings ($):
$ VACS = (FTE\_HR \times (VA\_H\_Weekly \times 52)) – (VA\_Rate \times (VA\_H\_Weekly \times 52)) $
Formula Sources: Investopedia – Employee vs. Contractor Costs, SHRM – Total Cost of an Employee
Variables Explained
Understanding each input is crucial for accurate cost analysis:
- FTE Annual Salary ($): The gross salary of a comparable full-time employee (40 hours/week).
- FTE Annual Overhead/Benefits (%): The percentage cost of employment taxes, health insurance, retirement contributions, and office space/equipment, typically ranging from 20% to 40% of salary.
- Virtual Assistant Hourly Rate ($): The fixed rate paid directly to the VA or the VA service provider.
- VA Hours Worked Per Week (Hours): The actual number of hours the VA is contracted to work on tasks weekly.
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What is Virtual Assistant Cost Savings?
Virtual Assistant Cost Savings (VACS) is the difference between the total cost of having a task performed by a full-time, in-house employee (FTE) and the cost of having the same task performed by a remote virtual assistant (VA) over a year. The savings are often significant because the VA cost model typically eliminates non-salary overhead like benefits, payroll taxes, office space, and equipment.
For most businesses, the FTE effective hourly rate (including salary and overhead) is substantially higher than the VA’s direct hourly rate. Furthermore, VAs are often utilized only for the specific hours they are needed, eliminating the cost of underutilized staff time, which further compounds the cost-saving benefit.
How to Calculate Cost Savings (Example)
Let’s use a step-by-step example with the default values ($60,000 FTE Salary, 25% Overhead, $15 VA Rate, 20 Hours/Week):
- Determine FTE Annual Cost (including overhead): FTE Salary $60,000 $\times$ (1 + 0.25) = $75,000.
- Calculate FTE Effective Hourly Rate: FTE Annual Cost $75,000 / 2,080 hours (Standard FTE year) $\approx$ $36.06 \text{ per hour}$.
- Calculate Total VA Annual Hours: 20 hours/week $\times$ 52 weeks/year = 1,040 hours.
- Determine FTE Equivalent Annual Cost: $36.06 \times 1,040 \text{ hours} \approx \$37,502.40$. (This is what the FTE would cost for the same 1,040 hours of work).
- Determine VA Annual Cost: VA Rate $15 \times 1,040 \text{ hours} = \$15,600.00$.
- Calculate Annual Savings (VACS): $\$37,502.40 – \$15,600.00 = \$21,902.40$.
Frequently Asked Questions (FAQ)
How does VA overhead compare to FTE overhead?
VA overhead is typically zero or minimal (e.g., software fees), whereas FTE overhead must include payroll taxes, insurance, retirement matching, sick leave, vacation, and office supplies, making it significantly higher.
Is the $2,080$ hours per year figure always accurate?
The $2,080$ hours figure is the standard assumption for 40 hours $\times$ 52 weeks. For a more precise calculation, you should subtract the estimated hours for paid time off (PTO) and holidays, which would increase the FTE’s *effective* hourly cost.
What kind of tasks are best suited for a VA to maximize savings?
Tasks that are repetitive, require administrative focus, or are easily documented (e.g., social media management, data entry, email filtering, appointment scheduling) maximize savings because they require minimal training and integration time.
What is the typical range for FTE overhead percentages?
Depending on the industry and benefits package, the FTE overhead percentage can range from 15% (minimal benefits) to over 50% (high-cost health insurance and retirement plans).