Calculate cost per hire with the standard formula: total internal and external recruiting costs divided by the number of hires. Break it down by role, see the external/internal split and the recruiting cost ratio against first-year pay.
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Hires in the period
People who started in the period, for the roles these costs cover.
$
Used for the recruiting cost ratio (total recruiting cost ÷ total first-year pay).
External costs
$
$
$
$
$
$
Internal costs
$
$
Interview hours × loaded hourly cost.
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$
Per-role breakdown (optional)
One role per line. Role-specific costs (e.g. that role's agency fee) should also be included in the totals above; shared costs are spread evenly per hire. Role hires replace the total hires above.
Enter your values to see the result.
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How to use the Cost Per Hire Calculator
Enter the number of hires in the period and, optionally, their average first-year salary.
Enter external costs: ads, agency fees, checks, travel, events and sign-on bonuses.
Enter internal costs: the recruiting team's pay, interviewer time, referral bonuses and software.
Optionally list roles with their hires and role-specific costs for a per-role breakdown.
Press Calculate cost per hire to see the result, split, ratio and tables.
Cost per hire formula
Cost per hire = (external costs + internal costs) ÷ total hires
External costs: ads and job boards, agency and search fees, background checks, assessments, candidate travel and relocation, events, sign-on bonuses.
Internal costs: recruiting team pay and benefits, hiring manager and interviewer time, referral bonuses, recruiting technology.
Recruiting cost ratio = total recruiting cost ÷ total first-year compensation of the hires × 100
Example with the default numbers: external costs are $49,500 and internal costs are $63,100, a total of $112,600. Spread over 25 hires that is $4,504 per hire. With an average first-year salary of $62,000 ($1,550,000 in total), the recruiting cost ratio is 7.26%.
What to include and leave out
Include
Usually leave out
Costs incurred to attract, screen and hire during the period
Onboarding and training after the start date
A fair share of recruiter salaries and benefits
The new hire's own salary
Sign-on and referral bonuses paid for these hires
Costs for roles that were not filled (track separately)
Interview time of managers and staff
Internal promotions and transfers (unless counted as hires)
Tips for lowering cost per hire
Grow referrals: referral bonuses are usually far cheaper than agency fees.
Keep a talent pipeline for roles you hire often, so you do not pay to advertise from scratch every time.
Track by role and source to see which channels bring hires who stay.
Frequently asked questions
What is the cost per hire formula?
Cost per hire = (total external recruiting costs + total internal recruiting costs) ÷ total number of hires in the period. For example, $49,500 external plus $63,100 internal for 25 hires is $112,600 ÷ 25 = $4,504 per hire.
What counts as external recruiting costs?
Money paid to outside parties: job board and advertising fees, agency and search fees, background checks and assessments, candidate travel and relocation, career fair and campus costs, and sign-on bonuses.
What counts as internal recruiting costs?
Costs inside the organization: the pay and benefits of recruiters and the talent acquisition team for the period, the time hiring managers and interviewers spend, employee referral bonuses, and recruiting technology such as an applicant tracking system.
How do I calculate cost per hire for each role?
Add the costs that belong only to that role, such as its agency fee, then spread the shared costs (team pay, software, general ads) evenly across all hires. Role cost per hire = shared cost per hire + role-specific cost ÷ hires in that role.
What is the recruiting cost ratio?
The recruiting cost ratio compares recruiting spend with what you pay the new hires: total recruiting cost ÷ total first-year compensation of those hires × 100. It makes it fairer to compare hiring for high-paid and lower-paid roles.
What is an average cost per hire?
Published surveys, such as those from SHRM, have reported average US cost per hire of a few thousand dollars, with executive hires costing far more. Your own figure depends on role mix and how many costs you include, so track it consistently over time.
Are all the tools on FreeToolCabin tested for quality and accuracy?
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