Cost per hire (CPH) is a recruitment metric that measures the average amount an organization spends to recruit and hire one employee. It is calculated by adding internal and external recruiting costs during a defined period and dividing that amount by the number of employees hired.
Cost per hire helps employers evaluate recruiting expenses, compare hiring methods, plan recruitment budgets, and identify opportunities to improve hiring efficiency.
The metric includes expenses such as recruiter compensation, job advertising, recruitment agency fees, candidate assessments, and hiring technology. An accurate calculation accounts for both the money paid to outside providers and the internal resources used throughout the recruitment process.
What Is the Cost Per Hire Formula?
Cost per hire equals total internal recruiting costs plus total external recruiting costs, divided by the number of hires completed during the measurement period.
The formula is:
Cost Per Hire = (Internal Recruiting Costs + External Recruiting Costs) ÷ Total Number of Hires
Cost Per Hire Calculator
Enter recruiting expenses and your number of hires for the same period. Your cost per hire updates automatically. Example amounts are filled in to get you started.
Your cost per hireAverage recruiting cost for each employee hired.
- Internal costs
- $8,000
- External costs
- $12,000
- Total recruiting costs
- $20,000
- Number of hires
- 10
Formula: (Internal recruiting costs + External recruiting costs) ÷ Number of hires. Amounts are in USD. Exclude the new employee’s ongoing salary and avoid counting the same expense twice.
Each component measures a specific part of recruitment spending:
- Internal recruiting costs: Expenses associated with employees, systems, and resources used within the organization to support recruitment.
- External recruiting costs: Payments to outside vendors, recruitment agencies, advertising platforms, and service providers involved in hiring.
- Total number of hires: The number of employees hired during the defined reporting period under the organization’s consistent counting rules.
The calculation can cover a month, quarter, or year. Organizations can also measure cost per hire by department, job category, location, or recruiting channel when they can assign the relevant costs accurately.
The reporting period, cost categories, and definition of a completed hire should remain consistent when comparing results.
How to Calculate Cost Per Hire
Calculating cost per hire requires collecting recruitment expenses, defining the number of hires, and applying the formula to the same reporting period.
1. Calculate Internal Recruiting Costs
Internal recruiting costs represent the organization’s own resources used to attract, evaluate, and select candidates.
These expenses may include:
- Salaries and benefits attributable to internal recruiters and talent acquisition staff.
- Hiring manager and employee time spent screening candidates or conducting interviews.
- Internal recruitment administration and coordination.
- Allocated expenses for recruitment systems and internal technology.
- Other internal recruiting resources included in the company’s measurement policy.
For example, a company may allocate a portion of a recruiter’s monthly compensation to the recruitment activities completed during that month.
When employees divide their time between recruiting and other responsibilities, the company should allocate the appropriate share rather than automatically including their full compensation.
2. Calculate External Recruiting Costs
External recruiting costs represent payments to third parties that support candidate attraction, evaluation, and placement.
Common expenses include:
- Job board subscriptions and paid job advertisements.
- Recruitment agency and executive search fees.
- External candidate sourcing services.
- Background screening and employment verification.
- Third-party skills assessments.
- Recruitment events and career fairs.
- Candidate travel and relocation expenses when included in the reporting methodology.
For employers using external recruitment providers, the applicable staffing agency or placement fee is an important component of external recruiting costs.
Classify costs consistently. For example, an external applicant tracking software subscription is a vendor expense, while employee time spent administering the system is an internal expense. Count each cost once.
3. Count the Number of Employees Hired
The denominator must represent the employees hired during the same reporting period used to calculate recruiting expenses.
For example, if a company completes ten hires during a quarter, those ten hires form the denominator.
Organizations should establish consistent rules for employee start dates, accepted offers, internal transfers, contract conversions, and canceled offers.
Hiring costs may occur before the employee’s starting date. Businesses should use a documented reporting method to account for those timing differences and apply it consistently across periods.
4. Divide Total Recruiting Costs by Total Hires
After calculating both cost categories and the number of hires, apply the formula.
For example:
- Internal recruiting costs: $8,000
- External recruiting costs: $12,000
- Total employees hired: 10
Cost Per Hire = ($8,000 + $12,000) ÷ 10 = $2,000
The company spent an average of $2,000 in recruitment expenses for each employee hired during the period.
Cost Per Hire Calculation Example
Consider a company that hires ten employees over one quarter and tracks the following recruitment expenses.
| Recruitment expense | Cost category | Amount |
|---|---|---|
| Internal recruiter compensation | Internal | $6,000 |
| Hiring manager time and internal administration | Internal | $2,000 |
| Recruitment agency fees | External | $7,000 |
| Job advertising | External | $3,000 |
| Background checks and assessments | External | $2,000 |
| Total | $20,000 |
The company calculates cost per hire as follows:
- Total internal costs: $8,000
- Total external costs: $12,000
- Total recruiting costs: $20,000
- Number of hires: 10
- Cost per hire: $20,000 ÷ 10 = $2,000
This example uses hypothetical figures to demonstrate the calculation. The $2,000 result is not an industry benchmark.
If the company maintains the same total recruiting budget but hires only eight employees, its cost per hire increases to $2,500.
If it hires twelve employees using the same budget, the cost per hire decreases to approximately $1,667.
These examples demonstrate how hiring volume affects the metric. They do not establish that the company would receive the same hiring quality or incur identical expenses at different hiring volumes.
What Costs Should Be Included in Cost Per Hire?
Cost per hire should include recruiting expenses that fall within the organization’s documented measurement framework.
The distinction between internal and external expenses matters because different types of spending require different management decisions.
| Internal hiring costs | External hiring costs |
|---|---|
| Recruiter salaries allocated to recruitment | Recruitment agency fees |
| Internal recruitment administration | Job postings and advertising |
| Hiring manager interview time | Background checks |
| Internal recruiting coordination | Third-party candidate assessments |
| Internally allocated recruiting resources | External sourcing services |
| Internal technology administration | Vendor recruitment software fees |
Employers should avoid double-counting expenses, especially when vendors provide bundled services or when employees support several recruitment activities.
Are Employee Salaries Included in Cost Per Hire?
The ongoing salary of the employee being hired is generally excluded from the standard recruiting cost-per-hire calculation.
Cost per hire measures the expenses involved in attracting, evaluating, and hiring an employee. The new employee’s regular compensation measures an ongoing employment expense.
However, the allocated salaries and benefits of recruiters and other employees performing recruitment activities may be included as internal recruiting costs.
The distinction matters when employers compare recruitment spending with the total financial commitment of adding employees.
Are Onboarding Costs Included in Cost Per Hire?
Onboarding costs should be distinguished from recruitment expenses unless the organization’s reporting framework explicitly includes qualifying pre-employment or hiring-related activities.
Training, equipment, orientation, and the time required for a new employee to become productive are often better evaluated separately from standard recruiting cost per hire.
An employer can measure these expenses when evaluating the total cost of bringing a new employee into the organization, but combining them with recruiting expenses without a consistent definition can distort comparisons.
What Is the Average Cost Per Hire in the United States?
SHRM’s 2025 benchmarking survey reported an average cost per hire of $5,475 for nonexecutive positions and $35,879 for executive positions in the United States.
The findings were published in SHRM’s 2025 benchmarking results, based on a survey conducted between January and March 2025.
| Position category | Average cost per hire | Source |
|---|---|---|
| Nonexecutive positions | $5,475 | SHRM 2025 Benchmarking Survey |
| Executive positions | $35,879 | SHRM 2025 Benchmarking Survey |
The survey included responses from 2,371 SHRM members across different industries, sectors, and organization sizes. The data were not weighted, and the response count varied by metric.
These numbers represent averages from the specified survey, not the cost every company should expect to pay.
SHRM also published 2026 recruiting benchmarking research, which reports that executive recruitment costs increased while nonexecutive costs remained relatively stable. The 2026 study provides a newer view of recruiting costs, but its findings should be compared using the same statistical measure and cost definitions.
Older figures, including the frequently cited $4,700 average, refer to previous research periods and should not be presented as current benchmarks without identifying their source year.
What Is a Good Cost Per Hire?
A good cost per hire reflects an organization’s recruiting requirements, the complexity of the positions filled, and the results produced by its hiring process.
A company filling entry-level administrative positions may operate with a different recruiting budget than a business hiring senior technical specialists or executives.
To evaluate cost per hire accurately, employers should compare:
- Similar positions and seniority levels.
- Equivalent geographic labor markets.
- Consistent recruiting cost categories.
- Comparable hiring volumes and reporting periods.
- Candidate quality and post-hire performance.
- Retention and recruitment timelines.
A lower cost per hire does not automatically indicate a better recruitment process. Reducing spending on assessments, sourcing, or candidate evaluation may produce a lower initial cost while creating problems with employee performance or retention.
Companies should interpret recruitment efficiency alongside the results of their hiring decisions.
How Does Average Cost Per Hire Vary by Industry?
Average cost per hire varies by industry because positions require different skills, recruitment methods, assessment processes, and levels of candidate availability.
Industry comparisons should account for the specific roles being filled rather than assuming every employee within an industry has a similar recruitment cost.
Technology and Software
Technology recruitment costs may include technical screening, coding assessments, specialist sourcing, and recruiter time devoted to identifying candidates with specific programming languages or development experience.
Hiring a senior software engineer can require different recruitment resources than hiring an entry-level IT support specialist.
The average cost per hire in technology therefore depends heavily on the role, seniority, candidate market, and recruitment model.
Healthcare
Healthcare recruitment may involve credential verification, professional licensing requirements, background screening, and role-specific assessments.
Employers hiring specialized clinical professionals may face different expenses than those recruiting administrative or support employees.
Finance and Professional Services
Finance and professional services recruitment may require technical assessments, regulatory checks, professional qualifications, and specialized candidate searches.
Recruitment expenses can increase when roles require uncommon expertise or extensive evaluation.
Retail, Hospitality, and High-Volume Hiring
High-volume hiring programs often recruit multiple employees for similar positions.
These organizations may distribute advertising, recruiting software, and administrative expenses across many hires, but the overall cost still depends on applicant volume, conversion rates, turnover, and sourcing methods.
Employers should use verified industry datasets with documented methodologies when comparing sector averages. Unsupported industry cost ranges can produce misleading budget estimates.
What Factors Affect Cost Per Hire?
Cost per hire changes according to the resources required to complete recruitment and the number of hires produced.
Recruitment Channel
Different sourcing channels generate different costs.
Recruitment agencies may charge placement fees, while job boards require advertising spending. Employee referrals and internal sourcing use different combinations of financial incentives, recruiter time, and administration.
A company should compare channel costs with the number and quality of hires each channel produces.
Role Complexity and Seniority
Specialized positions may require additional assessments, longer sourcing periods, or recruitment professionals with specific industry expertise.
Executive searches can involve different recruiting processes and fee structures from nonexecutive hiring.
Hiring Process Length
An extended hiring process can increase internal recruiting expenses when employees spend additional time interviewing, coordinating, and evaluating candidates.
However, reducing the number of interviews does not guarantee a better result if it weakens the quality of hiring decisions.
Recruitment Technology
An applicant tracking system can help organizations manage applications, recruitment stages, and candidate information.
Its subscription fees and related expenses should be assigned to the appropriate recruitment cost category when calculating cost per hire.
Hiring Volume
Hiring volume affects how recruiting expenses are distributed.
Organizations may spread some fixed recruiting costs across multiple hires, although additional recruitment activity can also create new variable expenses.
Geographic Market
The cost of recruiting can differ between labor markets because of advertising costs, available talent, recruiter compensation, and recruitment service pricing.
For distributed teams, employers should compare both recruitment expenses and the ongoing costs of their selected hiring model.
Why Is Cost Per Hire Important?
Cost per hire helps employers measure recruitment spending and make better-informed decisions about hiring budgets.
Recruitment Budget Planning
A company can use historical cost per hire to estimate the recruitment budget required for a future hiring plan.
For example, if a company expects to make 15 comparable hires and estimates a cost per hire of $2,000, its projected recruiting budget would be $30,000.
That estimate should be adjusted when planned positions differ in seniority, complexity, or recruitment method.
Recruitment Channel Evaluation
Cost-per-hire reporting can help compare the expenses associated with hiring through job boards, staffing agencies, referrals, and direct sourcing.
When channel-level data are available, employers can identify which sourcing methods generate hires at a reasonable cost.
Hiring Process Improvement
Cost data can reveal increases in advertising expenses, agency dependence, recruiter workload, or candidate assessment costs.
Employers can use HR analytics to connect spending with candidate movement, hiring outcomes, and workforce performance.
Workforce Planning
Recruitment budgets influence the total resources available for hiring new employees.
Tracking cost per hire allows HR leaders and finance teams to compare planned recruitment expenses with actual hiring activity and adjust future budgets.
Cost Per Hire vs. Cost Per Applicant, Cost Per Interview, and Time to Hire
Cost per hire measures recruitment spending for completed hires. Other recruiting metrics evaluate different stages of the candidate selection process.
| Metric | What it measures | Basic calculation |
|---|---|---|
| Cost per hire | Average recruitment cost per completed hire | Total recruiting costs ÷ Hires |
| Cost per applicant | Average acquisition cost per application | Applicant acquisition costs ÷ Applications |
| Cost per interview | Average cost associated with interviews | Defined interview costs ÷ Interviews |
| Time to hire | Duration of the candidate’s recruitment process | Time from candidate entry to accepted offer |
| Quality of hire | Outcomes associated with employees hired | Organization-defined performance and retention measures |
Cost Per Hire vs. Cost Per Applicant
Cost per applicant measures the cost of generating job applications, often through recruitment advertising or sourcing campaigns.
For example, an employer that spends $1,000 on job advertising and receives 100 completed applications has an advertising cost per applicant of $10.
That figure does not include every expense required to screen, interview, and hire an employee.
Cost Per Hire vs. Cost Per Interview
Cost per interview measures the average cost of conducting interviews based on a defined set of interview expenses.
It can help identify expensive stages in a recruitment process, but it does not measure the total cost of completed hires.
Cost Per Hire vs. Time to Hire
Time to hire measures the time between a candidate entering the recruitment process and accepting a job offer.
Cost per hire measures financial resources, while time to hire measures recruitment speed.
Both metrics can be evaluated together to identify hiring processes that are expensive, slow, or inefficient.
Cost Per Hire vs. Quality of Hire
Quality of hire evaluates the outcomes associated with new employees, using measures such as performance, retention, and hiring manager satisfaction.
An employer should consider quality of hire alongside recruitment spending to assess the value of its hiring decisions.
How to Reduce Cost Per Hire Without Sacrificing Candidate Quality
Employers can improve cost per hire by identifying unnecessary recruitment expenses and correcting inefficiencies in the stages that generate those costs.
1. Analyze Recruiting Costs by Source
Separate job advertising, referral programs, agency fees, and direct sourcing expenses.
Measure completed hires by channel and compare costs with candidate quality rather than focusing exclusively on application volume.
2. Improve Candidate Screening
Define job requirements before reviewing applicants and use consistent evaluation criteria.
A structured screening process can reduce unnecessary interviews and help recruiters spend more time evaluating qualified candidates.
3. Reduce Avoidable Hiring Delays
Review where candidates spend the most time waiting for interviews, feedback, or hiring decisions.
Reducing avoidable delays can lower internal recruiting hours when it decreases repeated coordination and administrative work.
4. Improve Recruitment Reporting
Track recruiting expenses and completed hires using consistent definitions.
An organization that cannot identify its largest cost categories will have difficulty determining which improvements actually reduce spending.
5. Compare Hiring Models
Internal recruiters, direct-hire agencies, staffing providers, and other hiring arrangements use different fee structures.
For example, a traditional placement fee may be calculated as a percentage of the employee’s salary, while an ongoing staffing arrangement may use hourly or monthly billing.
Employers should distinguish a one-time recruiting expense from recurring employment or staffing costs when comparing these models.
6. Evaluate Employee Retention
Frequent employee departures can create repeated recruitment expenses.
Tracking employee turnover alongside cost per hire helps employers understand how frequently they incur replacement hiring costs.
Retention data also provides context when evaluating the longer-term results of recruiting decisions.
How Should Companies Track Cost Per Hire?
Companies should use a consistent reporting process that connects recruitment spending with the hires completed during the measurement period.
A useful cost-per-hire report includes the reporting period, hiring category, number of hires, internal recruiting costs, external recruiting costs, and calculated cost per hire.
Hiring teams can segment the data by department, job family, seniority, location, and recruitment channel when the underlying records support those comparisons.
The report should also identify the methodology used to allocate shared expenses and determine when an employee counts as hired.
Cost per hire becomes more useful when evaluated alongside recruiting metrics such as time to fill, candidate conversion, offer acceptance, retention, and quality of hire.
Cost Per Hire FAQs
What is included in cost per hire?
Cost per hire includes internal and external recruiting expenses attributable to hiring employees during a defined period. Internal costs may include recruiter compensation and hiring administration, while external costs may include advertising, agency fees, assessments, and background checks. Organizations should document their cost categories and avoid double-counting shared expenses.
What is the average recruitment cost per hire?
SHRM’s 2025 benchmarking survey reported average costs of $5,475 for nonexecutive positions and $35,879 for executive positions. Actual recruitment costs vary according to job requirements, hiring location, recruitment methods, and organizational size. Employers should compare similar positions and consistent cost definitions when evaluating their own results.
How do you calculate cost per hire for one employee?
Cost per hire for a single employee can be calculated by adding the internal and external recruiting expenses attributable to that hire. For example, $1,000 in internal recruiting expenses plus $2,000 in external expenses produces a recruiting cost of $3,000. Shared expenses must be allocated using a consistent methodology.
What happens to cost per hire if no employees are hired?
Cost per hire cannot be calculated when the number of hires is zero because the formula requires division by the number of employees hired. The organization should report its recruitment spending and zero hires separately rather than recording the cost per hire as zero.
Does cost per hire include recruitment agency fees?
Recruitment agency fees are external recruiting expenses and should be included when they fall within the reporting period and measurement scope. The fee amount depends on the agency’s pricing structure, services, and contractual terms.
Is cost per hire the same as employee salary?
Cost per hire measures recruitment expenses, while employee salary measures compensation paid for work. The new employee’s ongoing salary is generally excluded from standard recruiting cost per hire, although internal recruiter compensation attributable to hiring may be included.
How often should companies calculate cost per hire?
Companies can calculate cost per hire monthly, quarterly, or annually, depending on hiring volume and reporting needs. They should use consistent time periods and definitions to produce meaningful comparisons. Organizations with infrequent hiring may need longer reporting periods to avoid conclusions based on very small numbers of hires.
Is a lower cost per hire always better?
A lower cost per hire indicates lower average recruiting expenditure under the organization’s measurement method, but it does not establish better hiring outcomes. Employers should evaluate candidate quality, retention, hiring speed, and role requirements before concluding that a cheaper recruitment process is more effective.
Compare Recruitment Costs for Remote Hiring
Recruiting expenses depend on the hiring method, position requirements, and the resources needed to find qualified employees.
Companies hiring remote professionals in Latin America can compare the staffing, staff-to-hire, and direct-hire arrangements available through Wow Remote Teams’ hiring process.
The company’s recruitment pricing explains how fees vary by hiring model, experience level, and job category.
When evaluating providers, compare the full recruitment expense, ongoing staffing costs where applicable, conversion fees, and the responsibilities included in each arrangement. These distinctions help employers calculate recruitment costs accurately and choose a hiring structure that fits their business.