About the Cost Per Hire Calculator
This cost per hire calculator follows the structure of the ANSI/SHRM cost-per-hire standard: total external recruiting costs plus total internal recruiting costs, divided by the number of hires in the same period. Enter what you spent on advertising, agencies, events, technology, screening, travel and relocation, and signing bonuses. Then add internal costs such as recruiter pay, interviewer time and referral bonuses. The calculator returns cost per hire, the split between external and internal spending, and the recruiting cost ratio.
Talent acquisition leaders use cost per hire to set recruiting budgets, compare sources and agencies, and show the effect of process changes. Finance teams use it in headcount plans. The recruiting cost ratio, total recruiting cost divided by the first-year pay of the people hired, lets you compare cost fairly between low-paid and highly paid roles.
Use one period, such as a quarter or a year, for every input, and count only hires that started in that period. Internal recruiter and interviewer costs should be the share of their loaded pay spent on recruiting. Leave out costs that are not part of hiring, such as general employer branding that doesn't lead to hires, or the new hires' own salaries.
With the default inputs, the cost per hire is $5,450.00. Change any value above to recalculate instantly.
How to use the cost per hire calculator
- 1Choose a period, such as last quarter or last year.
- 2Enter external recruiting costs: advertising, agencies, events, technology, screening, travel and signing bonuses.
- 3Enter internal costs: recruiter pay, interviewer time, referral bonuses and other overhead.
- 4Enter the number of hires who started in the period.
- 5Optionally add their total first-year pay to get the recruiting cost ratio.
Formula and method
The ANSI/SHRM cost-per-hire standard defines cost per hire as the sum of external and internal recruiting costs divided by the number of hires in the same period. External costs are paid to outside parties: advertising, agencies, events, technology, screening, candidate travel, relocation and signing bonuses. Internal costs are what your own organisation spends, such as recruiting staff pay and benefits, referral bonuses and related overhead. Many teams also add the time hiring managers and interviewers spend; set that field to 0 if your reporting leaves it out.
Because cost per hire rises naturally for senior roles, the recruiting cost ratio expresses total recruiting cost as a percentage of the hires' first-year pay, which makes groups with different pay levels comparable. Use one consistent period, and match costs to the hires they produced, so that a requisition still open at period end does not distort the result.
- external costs
- Spending paid to third parties for recruiting
- internal costs
- Your own staff time and internal spending on recruiting
- total hires
- Hires who started in the period
Worked examples
Mid-size company, 20 hires in a year
External costs add up to $55,000 and internal costs to $54,000, so $109,000 in total. Divided by 20 hires that is $5,450 per hire. Against $1.3 million of first-year pay the recruiting cost ratio is about 8.4%.
Small business hiring four people
With no agency and no recruiters, the owner spends $2,100 on job ads, tools and checks, plus $3,400 of interview time and referral bonuses. That gives $5,500 ÷ 4 = $1,375 per hire, about 3.1% of the hires' $180,000 first-year pay.
Executive search for three leaders
Search fees of $60,000 plus $3,000 of interview time give $63,000 for three hires, or $21,000 each. That is 19.1% of their $330,000 first-year pay, in line with retained-search fees that are typically charged as a percentage of salary.
Frequently asked questions
How do you calculate cost per hire?+
Add up all external recruiting costs (ads, agencies, events, technology, screening, travel, signing bonuses) and internal recruiting costs (recruiter pay, interviewer time, referral bonuses), then divide by the number of hires in the same period. This is the ANSI/SHRM formula.
What is the difference between internal and external recruiting costs?+
External costs are paid to outside parties, such as job boards, agencies, background check firms and travel providers. Internal costs are your own resources, such as recruiter salaries and benefits, the time managers spend interviewing, referral bonuses and administrative overhead.
What is the recruiting cost ratio?+
It is total recruiting cost divided by the total first-year pay of the people hired, as a percentage. It adjusts for pay level, so a $20,000 executive hire and a $2,000 hourly hire can be compared fairly. A lower ratio means hiring is more efficient relative to pay.
Should I include signing bonuses and relocation?+
Yes. Most cost-per-hire models count signing bonuses, relocation and candidate travel as external costs, because the money is spent to secure the hire. Track them separately as well, because they vary a lot from one role to another.
How can I lower my cost per hire?+
Common levers are filling more roles through referrals and direct sourcing, cutting agency use, improving job ads to attract better-fit applicants, cutting interview rounds and lowering early turnover so fewer roles need refilling. Track cost per hire by source to see which channels deliver hires most cheaply.