Cost-per-Hire Calculator

What Is Cost per Hire?

Cost per hire (CPH) is a recruiting metric that measures the total cost of filling a position, divided by the number of hires made. It's one of the most important metrics in talent acquisition because it directly ties recruiting activity to business spend. The formula is straightforward: (Total Internal Costs + Total External Costs) / Number of Hires = Cost per Hire.

The Society for Human Resource Management (SHRM) and the American National Standards Institute (ANSI) jointly developed the standard formula for calculating cost per hire. According to their research, the average cost per hire across all industries is approximately $4,700, though this varies significantly by role, industry, and region. Technical roles in competitive markets can easily exceed $10,000 per hire.

Internal vs. External Recruiting Costs

Understanding the difference between internal and external costs is crucial for optimizing your recruiting budget. Internal costs include everything your organization spends on its own recruiting infrastructure: recruiter salaries, hiring manager time, internal referral programs, ATS and recruiting software subscriptions, and overhead like office space and equipment allocated to the recruiting function.

External costs cover everything you pay to outside vendors and services: job board posting fees, recruitment agency or headhunter fees, background check providers, skills assessment platforms, employer branding campaigns, recruitment marketing spend, career fair attendance, and relocation assistance. For most companies, external costs represent the larger portion of total cost per hire, with agency fees often being the single biggest line item.

How to Reduce Cost per Hire

Reducing cost per hire doesn't mean cutting corners on quality. The most effective strategies focus on improving efficiency and building sustainable talent pipelines:

• Build an employee referral program. Referred candidates cost less to hire, start faster, and stay longer. Most companies with strong referral programs report 40-60% lower cost per hire for referred candidates.
• Invest in employer branding. A strong employer brand reduces your dependence on paid job boards and agencies. Companies with strong employer brands see 43% lower cost per hire according to LinkedIn research.
• Use AI-powered sourcing tools. Modern recruiting platforms like Taleva can search millions of candidate profiles and surface qualified matches automatically, reducing the hours recruiters spend manually sourcing.
• Optimize your job postings. Write clear, inclusive job descriptions that attract qualified candidates. Poor job postings lead to high application volumes with low quality, wasting screening time.
• Track and analyze your metrics. You can't improve what you don't measure. Track cost per hire by department, role level, and source to identify where your money goes and where you can optimize.

Why Cost per Hire Matters

Cost per hire serves multiple purposes beyond simple accounting. It helps recruiting leaders justify budget requests, evaluate the ROI of different sourcing channels, and make data-driven decisions about where to invest. When presented alongside quality-of-hire metrics, CPH provides a complete picture of recruiting effectiveness.

However, cost per hire shouldn't be viewed in isolation. A lower CPH isn't always better if it comes at the expense of candidate quality or time to fill. The goal is to optimize the balance between cost, speed, and quality. Some of the best hires are worth investing more in, while others can be filled efficiently through lower-cost channels. This calculator helps you understand your baseline so you can make informed decisions about where to allocate your recruiting budget.