I’ll admit it: when I took over as Managing Director of SimpleTexting, recruiting was the one team I didn’t have clean metrics for. Sure, I had a rough sense of how long it took us to hire and whether those hires were working out, but it was more intuition than actual reporting.
Then I was talking to another founder, and he said something that completely changed how I thought about recruiting metrics: “Most companies don’t actually know what hiring costs them. They only know what they can see on the invoice.”
That stuck with me. Because he was right. The average cost per hire is often cited at around $4,700, and more recent SHRM benchmarks put non-executive cost-per-hire even higher on average, depending on how it’s measured. But those numbers still only capture the visible costs. What most teams miss are the hidden ones driving that total up: recruiter inefficiencies, longer time-to-fill, wasted job board spend, and the productivity lost while a role sits open.
Even in a softer labor market, hiring hasn’t suddenly become cheap. Wage pressure, turnover, and fragmented workflows are still keeping costs stubbornly high. If you haven’t recalculated your true cost per hire recently, now is the time. This article will show you how.
What is cost per hire?
Cost per hire is a recruiting metric that measures the average total expense required to hire a new employee. In the SHRM/ANSI standard, it is defined as the mean average of total costs divided by the number of hires, using internal and external recruiting costs gathered over the same measurement period.
At a practical level, cost per hire tells recruiting teams what they are really spending to fill roles. That includes the obvious costs, like job ads and agency fees, and the less visible ones, like recruiter time, hiring manager time, and recruiting technology.
This metric matters because recruiting rarely gets expensive in one dramatic place. Costs usually spread out across sourcing, screening, coordination, and vendor spend. Cost per hire gives you one number that helps make that sprawl visible.
Why cost per hire matters for recruiting teams
Tracking cost per hire helps recruiting teams understand whether the hiring process is efficient, where money is being wasted, and how hiring costs change by role, team, or business unit.
It is especially useful for:
- Budget planning
- Process optimization
- Channel comparison
- Stakeholder reporting
Used well, cost per hire helps you answer questions like:
- Are we spending too much on agencies for certain roles
- Are hiring managers burning too much time in early-stage interviews
- Are paid sourcing channels actually outperforming referrals
- Are recruiting costs rising because the process is slow, not because talent got more expensive
The SHRM standard also notes that cost-per-hire has long been used to support budgeting and benchmark recruiting effectiveness and staffing efficiency.
The cost per hire formula
The standard formula is:
(Internal Costs + External Costs) / Total Number of Hires = Cost Per Hire
The key is consistency. Your costs and your hires need to be measured across the same period, whether that is monthly, quarterly, or annually. The SHRM/ANSI standard explicitly defines cost per hire as internal plus external costs divided by total hires in a time period.
Internal recruiting costs
Internal costs are the expenses tied to your in-house recruiting effort.
These often include:
- Recruiter salaries and benefits
- Hiring manager time spent reviewing candidates and interviewing
- Recruiting technology such as your ATS, video interview platform, and assessment tools
- Employee referral bonuses
- Internal training for recruiters or interviewers
The SHRM/ANSI standard describes internal cost factors as expenses related to internal staff, capital, and organizational costs of the recruitment and staffing function, and includes examples such as fully loaded recruiting salaries and talent acquisition system costs.
External recruiting costs
External costs are payments made to outside vendors or services.
These often include:
- Job board fees
- Recruitment agency fees
- Background checks and drug screenings
- Employer branding spend tied to recruiting
- Career fairs and recruiting events
- Candidate travel or reimbursed expenses
The comparable SHRM/ANSI standard includes external categories such as advertising and marketing, background checks, campus recruiting, RPO fees, sourcing costs, recruiting technology, third-party agency fees, and travel expenses.
Total number of hires
This is the number of employees who accepted offers and started during the measurement period.
That sounds simple, but consistency matters. If you calculate costs over a quarter, use the number of hires from that same quarter. Do not compare annual costs against monthly or quarterly hires. The standard also treats hires as whole hires rather than fractional full-time-equivalent counts.
How to calculate cost per hire step by step
Follow the steps below or jump straight to our handy cost-per-hire calculator below.
1. Gather your recruiting cost data
Start by choosing a time period. Quarterly is often the most practical because it gives you enough volume to make the number useful without waiting too long to spot a trend.
Then pull cost data from:
- Finance reports
- HR systems
- Vendor invoices
- Recruiting software subscriptions
- Internal time estimates for recruiters and hiring managers
Some inputs will be exact, like agency invoices. Others will be estimates, like how much recruiter salary should be allocated to hiring activity. That is normal. The SHRM standard explicitly says the metric should aim for high data quality, but it does not require a perfect penny-by-penny reconciliation like financial reporting does.
2. Add up internal costs
Now total your internal recruiting costs.
This usually includes:
- The portion of recruiter salaries and benefits tied to hiring
- Hiring manager interview and review time
- Internal recruiting software and infrastructure
- Referral bonuses
- Training or enablement costs connected to the hiring process
The hardest part is usually salary allocation. If recruiters split time across hiring, operations, and employer branding, you will need a reasonable method for assigning only the hiring-related portion. Even a simple hours-based estimate is better than leaving those costs out completely.
3. Add up external costs
Next, total your external costs.
These usually include:
- Job board invoices
- Agency fees
- Background check bills
- Assessment vendor costs
- Event and career fair spend
- Candidate travel reimbursements
This is often the easier half of the equation because the data lives in invoices and contracts. Just make sure you include both fixed costs, like annual subscriptions, and variable costs, like per-hire or per-candidate fees.
4. Divide by total hires
Once you have total internal costs and total external costs, divide the combined number by total hires in the same period.
The final number gives you your average cost per hire for that period.
Most teams should calculate this at two levels:
- Overall company-wide cost per hire
- Segmented cost per hire by department, role family, or location
The overall number is useful for finance and leadership. The segmented number is where the operational insight usually lives.
The free cost per hire calculator
Most teams undercount what hiring actually costs. This calculator uses the SHRM formula (total external costs + total internal costs ÷ number of hires) and benchmarks your result against the $4,700 national average. Plug in your numbers. It updates as you type.
Cost per hire statistics from 2025 and 2026
How much are companies really spending to hire in 2026? According to the latest data, the average cost per hire in the United States is around $4,700, based on SHRM benchmarks. But that figure varies widely based on company size, role type, and industry.
Here’s a breakdown:
| Hiring category | Average cost per hire |
|---|---|
| All industries (U.S. avg) | ~$4,700 |
| Entry-level roles | $2,000–$3,000 |
| Technical hires | $6,000–$10,000+ |
| Executive hires | ~$28,000 |
| Employee referrals | ~$1,000 less per hire |
Note: Benchmarks compiled from SHRM and industry reports; actual costs vary widely by company size, location, and role complexity.
What is a good cost per hire for your company
A good cost per hire is not simply a low one.
A lower number can look efficient while hiding poor outcomes. If those hires leave quickly, underperform, or require the process to restart, your true hiring cost is much higher than the metric suggests.
That is why cost per hire should be tracked alongside:
- Time to hire
- Offer acceptance rate
- New hire retention
- Quality of hire
The SHRM/ANSI standard is clear that cost per hire does not fully describe recruiting effectiveness on its own and does not account for factors like time to fill, quality of hire, or hiring manager and candidate satisfaction.
So the better question is not, “Is our cost per hire low?” It is, “Is our cost per hire appropriate for the outcomes we are getting?”
Average cost per hire for small businesses
Small businesses usually face a different cost-per-hire equation than larger companies.
They often have:
- Less negotiating power with vendors
- Smaller talent pools
- Fewer dedicated recruiting resources
- More hiring manager involvement in every stage
That can make the per-hire cost feel high, even when total hiring volume is low.
The upside is that small teams often have the most to gain from process improvements. If you can remove just a few hours of manual screening or scheduling from each role, the impact shows up fast. That is why lean teams tend to benefit disproportionately from tools that reduce coordination work and compress early-stage screening.
How to reduce your cost per hire
Reducing cost per hire works best when you target the actual drivers of cost instead of cutting blindly.
Streamline your screening process
Phone screens are one of the biggest hidden labor costs in recruiting.
They create scheduling overhead, stretch out the funnel, and eat recruiter time that could be spent on higher-signal conversations. Replacing manual phone screens with async video interviews can help teams review more candidates in less time and with less coordination.
For lean teams, that often makes the internal-cost side of cost per hire much easier to control.
Use structured interviews
Structured interviews reduce waste in two ways.
First, they make it easier to filter out weak-fit candidates earlier. Second, they improve decision quality, which reduces the odds of expensive rework later in the process.
If every interviewer is asking different questions and scoring loosely, you usually end up with more rounds, slower decisions, and more debate than necessary.
Automate repetitive recruiting tasks
Some recruiting work should stay human. A surprising amount should not.
The best automation targets repetitive tasks such as:
- Interview scheduling
- Candidate reminders
- First-pass screening
- Basic coordination and status updates
- Reference-check workflows
The goal is not to remove judgment. It is to free up recruiter time for the parts of hiring where judgment actually matters.
Optimize your sourcing channels
Not every source produces hires at the same cost.
Track cost per hire by channel and compare:
- Job boards
- Referrals
- Agencies
- Talent communities
- Career site traffic
- Outbound sourcing
A channel that looks expensive upfront can still be efficient if it produces faster, higher-quality hires. A cheap channel can be costly if it fills the funnel with low-fit applicants that waste recruiter and manager time.
Best practices for tracking hiring costs
Review costs quarterly
Quarterly review is usually the best rhythm.
Monthly data can be noisy. Annual data comes too late to fix anything. Quarterly recruiting budget reporting gives you enough signal to spot cost creep before it becomes a bigger budgeting problem.
Segment by role and department
A single blended cost-per-hire number can hide the real story.
Engineering, sales, customer support, and operations roles often behave very differently. Segmenting by function or department helps you find where costs are concentrated and where optimization will actually matter.
Benchmark against industry data
External benchmarks are useful for context, especially when leadership wants to know whether your number is “normal.”
But your own historical trend matters more. A company that improves cost per hire quarter over quarter is usually in a better position than one that merely matches a generic benchmark.
Common mistakes when calculating cost per hire
The most common errors are not in the formula. They are in the inputs.
Watch out for these mistakes:
- Forgetting soft costs like hiring manager time
- Mixing time periods between costs and hires
- Optimizing only for low cost, not hiring quality
- Excluding failed hires from the bigger picture
- Using one blended number across all roles
The biggest trap is undercounting internal effort. If recruiters, coordinators, and hiring managers are spending hours on manual screening and interview admin, that cost belongs in the calculation whether or not it appears as a line item on a vendor invoice.
Start reducing your cost per hire with smarter screening
Truffle helps reduce the internal cost side of cost per hire by cutting out one of the biggest recruiting time sinks: manual first-round screening.
With Truffle, teams can combine resume screening, one-way video interviews, and talent assessments in a single workflow. AI scores, summarizes, and ranks candidates against your criteria, so recruiters can focus on who is actually worth speaking to.
If your current process relies heavily on phone screens and scheduling back-and-forth, that is usually one of the fastest places to lower cost per hire without lowering hiring quality.
FAQs about cost per hire
Does cost per hire include the new employee’s salary?
No. Cost per hire measures the cost of sourcing, recruiting, and staffing a role, not the employee’s ongoing compensation after they join. The SHRM/ANSI standard defines the metric around recruiting and staffing costs associated with filling the position.
Should onboarding costs be included in cost per hire?
Generally, post-hire onboarding is not the core focus of the SHRM/ANSI standard, which scopes cost per hire around sourcing, recruiting, and staffing activities. Some pre-start expenses can still appear in scope, such as drug testing that happens before employment begins or during onboarding, but teams should be consistent in what they include.
What is the difference between cost per hire and cost of vacancy?
Cost per hire measures what you spend to fill a role. Cost of vacancy measures what the business loses while the role stays open, such as lost productivity, slower execution, or missed revenue.
They answer different questions, and you usually need both to understand the full economics of hiring.
How often should companies calculate cost per hire?
Quarterly is usually the best cadence for most recruiting teams. It gives you enough data to be meaningful and enough speed to catch negative trends before they become the new normal.
