How do you calculate cost per hire?
Example figures are illustrations, not benchmarks. USD.
To calculate cost per hire, add total internal recruiting costs and total external recruiting costs, then divide by the number of hires in the same period. Count every cost that exists because you recruited, including staff time, then divide by hires made, not by candidates interviewed.
Want the arithmetic done for you? Use the free cost per hire calculator, then come back here to decide what to count.
At a glance
- Formula: (internal + external costs) / hires.
- Use one fixed period (quarter or year) and the same hires.
- Do not include salary, signing bonus or relocation unless you want "total cost of hire". Decide and label it.
What counts as an external cost?
Job-board and advertising fees, agency or recruiter placement fees, background-check and assessment fees, sourcing tools and subscriptions, career-fair costs, candidate travel, referral bonuses paid.
What counts as an internal cost?
Recruiter and coordinator pay for time spent on hiring, interviewer time, hiring-manager time, onboarding-admin time, and recruiting-team software. Estimate time as hours multiplied by loaded hourly cost.
Worked example (illustrative numbers only)
Example: a 40-person company hires 4 people in a quarter.
| Cost | Type | Example amount |
|---|---|---|
| Job-board postings | External | $1,200 |
| Agency fee on one hire (example: 20% of a $90,000 salary) | External | $18,000 |
| Background checks, 4 candidates at an example $60 | External | $240 |
| Recruiter time: 120 hours at an example $45 loaded | Internal | $5,400 |
| Interviewers: 60 hours at an example $70 loaded | Internal | $4,200 |
| Referral bonus (1 hire) | External | $1,000 |
| Total | $30,040 |
Cost per hire = $30,040 / 4 = $7,510. The agency hire alone cost far more than the others; also calculate cost per hire by source. Replace every figure with your own.
Copy-paste spreadsheet layout
Sheet "Costs" A: Date | B: Category | C: Internal/External | D: Source | E: Amount | F: Note
Sheet "Hires" A: Name/ID | B: Role | C: Start date | D: Source
Sheet "Summary"
Total internal =SUMIF(Costs!C:C,"Internal",Costs!E:E)
Total external =SUMIF(Costs!C:C,"External",Costs!E:E)
Hires =COUNTA(Hires!A2:A)
Cost per hire =(B2+B3)/B4
By source =SUMIF(Costs!D:D,"[Source]",Costs!E:E)/COUNTIF(Hires!D:D,"[Source]")Step by step: calculate your own number
- Pick a period, such as the last quarter or year, and list every hire that started in it.
- Pull external costs from invoices and card statements: ads, agency fees, assessments, background checks, referral bonuses.
- Estimate internal time. Ask recruiters, coordinators and interviewers for hours per hire, then multiply by a loaded hourly cost your finance team agrees on.
- Add internal and external costs, then divide by the hires in the period.
- Repeat by source (job board, referral, agency, careers page) so you can compare channels.
- Write down what you counted, so next quarter's number is comparable.
Cost per hire by source
Splitting the total by source shows where money produces hires. Use the same formula for each channel: costs tied to that channel divided by the hires it produced. Shared costs, such as recruiting software, can be split in proportion to hires or kept in a separate "overhead" line. Pick one approach and keep it.
Common mistakes
- Dividing by applicants or interviews instead of hires.
- Leaving out internal time because it does not appear on an invoice.
- Mixing periods, for example counting this quarter's ad spend against last quarter's hires.
- Comparing your number with another company's without checking what they counted.
- Averaging an agency hire with free referral hires and acting on the blended figure only.
How do you bring it down?
Track by source and stop paying for the ones that produce no hires; shorten the interview loop with a scorecard; compare an agency fee against internal time before using one.
FAQ
Is cost per hire the same as cost of hire? Not always. Cost of hire often adds salary-related and onboarding costs. State which you use.
What is a good cost per hire? It depends on role level and market. We do not quote a benchmark.
Do unfilled roles count? Costs spent on roles you did not fill are still costs; show them separately as "spend on open roles".
Should I include my own time as founder? Yes, at a realistic hourly value, and say so.
How often should I recalculate it? Quarterly is common. Use the same period and definitions each time so the trend means something.
Next step: Post a job on LiveRec and record the source of each applicant.
Related guides
Sources
See front matter. Accessed 30 October 2026.