Methodology · sourced multipliers
Every number, cited.
The Decision Cost Calculator uses 14 published multipliers from McKinsey, Bain, Gallup, HBR, and Pepperdine. Outputs are ranges (low / median / high) so uncertainty is on the page, not hidden inside the math.
The point isn't to maximize the number. It's to give you a number your CFO will accept in a memo.
Industry calibration
Each industry modifies three axes (opportunity cost, capital return, and owner hourly rate) within ±40% of the published baseline. The published bands are wide enough to absorb most of the variance; this is calibration, not a different model.
High gross margin (60–80%), people-leveraged, owner comp typically 6–10% of revenue.
Moderate margin (35–50%), labor-intensive, owner comp typically 4–7% of revenue.
Lower margin (25–40%), capital-intensive, owner comp typically 3–6% of revenue.
Thin margin (15–30%), high volume, owner comp typically 3–5% of revenue.
Variable margin (30–55%), inventory- and ad-spend-intensive, owner comp typically 4–7% of revenue.
Wide margin range — capital-heavy on development, fee-based on brokerage/PM. Owner comp typically 5–10% of revenue; idle capital is expensive in this category.
High gross margin (70–85%), high revenue-per-employee, owner comp typically 7–12% of revenue.
Neutral defaults — published coefficients applied without industry adjustment.
The multipliers
Grouped by the decision they shape. Click any source to read the primary research.
Senior hire I haven't made
Run it →Revenue drag while a senior seat sits empty
medium confidenceBain leadership-effectiveness work shows mature companies operating without filled key leadership roles see 6–15% revenue drag on the lines those seats own. Range varies with how clearly the seat is scoped.
Lost output as % of loaded salary while seat unfilled
medium confidenceCEB/Gartner Talent Drain research and SHRM cost-of-vacancy benchmarks converge on 35–55% of loaded salary in lost output during open senior roles (work absorbed at premium by other staff, plus deferred initiatives).
Note: We use the conservative end and add a small weekly escalation for knowledge gaps.
SHRM Cost-of-Vacancy benchmark / CEB Talent DrainWeekly escalation factor on lost output
low confidenceKnowledge gaps and mis-prioritization compound while a senior seat is empty. Typical escalation curve is 2–5% per week beyond week 4 (capped at 2.5x baseline).
Note: Capped to prevent runaway numbers at long vacancies.
Internal practitioner estimate (calibrated against client data)Owner compensation as % of revenue at $10M-$50M
medium confidencePepperdine PCMR and BizBuySell owner-comp benchmarks show owners of $10M-$50M businesses typically take 3-8% of revenue in total compensation (W-2 + distributions). We use 5% midpoint divided by 2,000 hrs to derive an effective hourly rate, with a $200/hr floor.
Underperformer I haven't moved on from
Run it →Productivity loss as % of salary for disengaged employees
high confidenceGallup's State of the Global Workplace research consistently finds disengaged employees cost 18–34% of salary in lost productivity; actively disengaged can reach 50%.
Productivity drag on each teammate around a B-player
medium confidenceHBR research on B-players and 'managing toxic colleagues' shows surrounding teammates absorb 4–12% productivity drag (extra coordination, morale tax, work-arounds).
Note: We avoid double-counting by NOT also applying full Gallup disengagement on top — the HBR tax already encompasses the team-level effect.
HBR — Managing the toxic employeeOutput gain from replacing B with A player
medium confidenceMcKinsey's War for Talent and SHRM A-player productivity research show 20–50% output uplift when replacing a B-player with an A-player in the same role.
Owner compensation as % of revenue at $10M-$50M
medium confidencePepperdine PCMR and BizBuySell owner-comp benchmarks show owners of $10M-$50M businesses typically take 3-8% of revenue in total compensation (W-2 + distributions). We use 5% midpoint divided by 2,000 hrs to derive an effective hourly rate, with a $200/hr floor.
Pricing change I haven't pulled
Run it →Operating profit lift per 1% price increase
high confidenceMcKinsey's global pricing study analyzed Global 1200 companies and found a 1% price increase produces a median 8.7% operating profit lift, with a typical range of 6–11% across industries.
Note: We model unrealized REVENUE rather than profit (more conservative — owner can apply their own margin).
McKinsey Global Pricing SurveyCustomers locked into legacy pricing per week of delay
medium confidenceApproximation derived from typical B2B contract renewal cadence (12-month average term ⇒ ~2% of book renews per week, with ~25% materially price-sensitive). Conservative end used at low.
Note: Cap at 15% total to avoid runaway compounding.
Gartner B2B Buying Behaviour 2023Owner compensation as % of revenue at $10M-$50M
medium confidencePepperdine PCMR and BizBuySell owner-comp benchmarks show owners of $10M-$50M businesses typically take 3-8% of revenue in total compensation (W-2 + distributions). We use 5% midpoint divided by 2,000 hrs to derive an effective hourly rate, with a $200/hr floor.
Partnership / deal I haven't closed
Run it →Probability decay per week on stalled B2B deals
high confidenceHubSpot sales benchmark and Gong revenue intelligence both show stalled B2B deals lose 1.5–3% close probability per week of inactivity.
Owner compensation as % of revenue at $10M-$50M
medium confidencePepperdine PCMR and BizBuySell owner-comp benchmarks show owners of $10M-$50M businesses typically take 3-8% of revenue in total compensation (W-2 + distributions). We use 5% midpoint divided by 2,000 hrs to derive an effective hourly rate, with a $200/hr floor.
Org restructure I keep deferring
Run it →Weekly coordination tax per ambiguous reporting edge
low confidenceBrooks's Law and Mythical Man-Month established that coordination overhead grows with edges in the org graph. We translate to dollars using an industry estimate of $40–120/edge/week, calibrated against Lattice/Gusto org-design benchmarks.
Note: Edges capped at min(N(N-1)/2, 8N) to bound runaway in large orgs.
Brooks — Mythical Man-Month / Lattice org benchmarksProductivity drag during structural uncertainty
medium confidenceMIT Sloan and BCG research on org-design transitions consistently shows 8–18% productivity drag while reporting lines are unclear or restructure is pending.
Owner compensation as % of revenue at $10M-$50M
medium confidencePepperdine PCMR and BizBuySell owner-comp benchmarks show owners of $10M-$50M businesses typically take 3-8% of revenue in total compensation (W-2 + distributions). We use 5% midpoint divided by 2,000 hrs to derive an effective hourly rate, with a $200/hr floor.
Major capital deployment
Run it →Annual opportunity cost of idle capital
medium confidencePepperdine Private Capital Markets Report and EBITDA-multiple research show owner-led businesses at $10M-$50M typically achieve 8-20% annual return on deployed capital. Idle capital foregoes that return.
Annual decay on identified acquisition synergy
medium confidenceBain M&A research shows identified synergies decay 10-30% annually while a deal is deferred — competitors react, key people leave, multiples drift.
Owner compensation as % of revenue at $10M-$50M
medium confidencePepperdine PCMR and BizBuySell owner-comp benchmarks show owners of $10M-$50M businesses typically take 3-8% of revenue in total compensation (W-2 + distributions). We use 5% midpoint divided by 2,000 hrs to derive an effective hourly rate, with a $200/hr floor.
Another call sitting on my desk
Run it →Probability decay per week on stalled B2B deals
high confidenceHubSpot sales benchmark and Gong revenue intelligence both show stalled B2B deals lose 1.5–3% close probability per week of inactivity.
Owner compensation as % of revenue at $10M-$50M
medium confidencePepperdine PCMR and BizBuySell owner-comp benchmarks show owners of $10M-$50M businesses typically take 3-8% of revenue in total compensation (W-2 + distributions). We use 5% midpoint divided by 2,000 hrs to derive an effective hourly rate, with a $200/hr floor.
You read the math
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