Average Payroll Cost is a term used to refer to the total sum of money an employer pays their staff in wages and salaries over a given period. It’s calculated by adding up all of the employer’s payroll expenses for that period and dividing it by the number of employees on the payroll at that time. The resulting figure provides a measure of how much each employee costs the employer, and can be used to benchmark performance against other organizations or even within the same company. Knowing your Average Payroll Cost is essential for creating realistic budgets, tracking team productivity, and making sure you’re paying fair wages across the board.