Cost Per Hire Calculator Formula
Understand the math behind the cost per hire calculator. Each variable explained with a worked example.
Formulas Used
Cost Per Hire
cost_per_hire = total_hires > 0 ? (external_costs + internal_costs) / total_hires : 0Total Recruiting Cost
total_recruiting_cost = external_costs + internal_costsExternal Cost Share
external_pct = (external_costs + internal_costs) > 0 ? (external_costs / (external_costs + internal_costs)) * 100 : 0Variables
| Variable | Description | Default |
|---|---|---|
external_costs | External Recruiting Costs (agencies, job boards, ads)(USD) | 30000 |
internal_costs | Internal Recruiting Costs (recruiter salary, tools, referral bonuses)(USD) | 20000 |
total_hires | Total Hires | 10 |
How It Works
How to Calculate Cost Per Hire
Formula
Cost Per Hire = (External Costs + Internal Costs) / Total Hires
This metric follows the ANSI/SHRM standard formula. External costs include agency fees, job board postings, career fairs, and advertising. Internal costs cover recruiter compensation, ATS software, employee referral bonuses, and interview expenses. Tracking cost per hire helps you optimize recruiting budgets and compare sourcing channels.
Worked Example
A company spent $30,000 on external recruiting and $20,000 on internal recruiting to make 10 hires.
- 01Total Recruiting Cost = $30,000 + $20,000 = $50,000
- 02Cost Per Hire = $50,000 / 10 = $5,000
- 03External Cost Share = $30,000 / $50,000 x 100 = 60%
Frequently Asked Questions
What is the average cost per hire?
The SHRM benchmark is roughly $4,700 for US companies. Technical and executive roles can cost $15,000-$30,000+ due to specialized recruiter fees and longer search times. Entry-level roles may cost under $2,000.
How can I reduce cost per hire?
Invest in employee referral programs (typically cheaper and higher quality), build an employer brand to attract inbound candidates, use LinkedIn and social recruiting, and optimize your interview process to reduce time-to-hire.
Learn More
Guide
How to Calculate Employee Cost
Learn how to calculate the true cost of an employee beyond salary. Covers taxes, benefits, overhead, and hidden costs that affect total compensation and business budgeting.
Ready to run the numbers?
Open Cost Per Hire Calculator