Cost Per Hire Calculator

Introduction: What is cost per hire?

Cost per hire (CPH) is a core recruiting metric that tells you how much you spend to bring one new employee on board. It combines external expenses (agency fees, job ads, assessments) with internal costs (recruiter and hiring manager time, interviews, onboarding, and training). For strategic roles, you may also want to estimate the productivity impact while a new hire ramps up.

This calculator is designed for HR, talent acquisition, and finance teams who want a more complete view of hiring costs than simple agency-fee-plus-job-ads formulas. By entering your own salary, time, and spend data, you can estimate a directional cost per hire that reflects how you actually recruit.

How this cost per hire calculator works

The tool groups your inputs into four major components and then divides the total by the number of hires you plan to make in the role or hiring round:

• External recruiting costs – agency fee, job board ads, employer branding campaigns, assessments, background checks, relocation, and signing bonuses.
• Internal recruiting time – hours spent by recruiters, hiring managers, and other interviewers, multiplied by their loaded hourly rate.
• Onboarding and training – equipment and technology plus HR onboarding time, formal training hours, and mentor or buddy support.
• Productivity ramp-up (optional) – the cost of the new hire being less than fully productive while they learn the job.

All of these are converted into a total hiring cost, then spread across the number of hires you entered. At a high level, the core structure looks like this:

Where each component is built from the fields you enter. For example:

• Internal recruiting time cost = (recruiter hours × recruiter hourly rate) + (hiring manager hours × their hourly rate) + (other interviewer hours × their average hourly rate).
• Onboarding and training cost = equipment and technology + (HR onboarding hours × HR hourly rate) + (formal training hours × training cost per hour) + (mentor hours × mentor hourly rate).
• ATS or tools cost – if you enter an "ATS cost per hire", this is added directly to the per-hire total.

How productivity loss is approximated

If you choose to include productivity loss, the calculator uses the role's annual salary and the ramp-up period in weeks to estimate the impact of the new hire being less than fully effective during onboarding. A simple way to think about this is:

Weekly fully loaded salary (based on base salary) is multiplied by the estimated fraction of productivity that is "missing" while the new hire ramps up. For example, if you assume that on average they are at 50% productivity across the ramp-up period, the lost value over 12 weeks is roughly half of 12 weeks of salary. Because salary structures and productivity patterns vary widely, this piece is best treated as a directional estimate rather than a precise accounting measure.

Interpreting your cost per hire result

Once you run the calculator, you will see a total cost per hire for the scenario you entered. To make sense of it, consider three lenses:

1. Absolute level – How large is the cost per hire in currency terms, and how does it compare with your typical budget for this role?
2. Share of annual salary – Divide cost per hire by the role's annual salary to see what percentage of first-year base pay you are spending to fill the role.
3. Cost structure – Which category (external, internal time, onboarding/training, productivity loss) is driving most of the total?

Industry surveys often find that cost per hire can range from around 10–30% of annual salary for many professional roles, with highly specialized or executive positions landing at the higher end or above. Your numbers may legitimately fall outside these ranges depending on industry, geography, and hiring strategy.

Illustrative benchmarks and scenarios

The table below presents simplified, directional scenarios using typical assumptions for different role types. These are not prescriptions, but they can help you sense-check your own results.

Use these ranges as rough context only. Your own cost per hire may be higher or lower, especially if you rely heavily on agencies, compete in very tight talent markets, or make significant investments in training.

Example: hiring a software engineer

Imagine you are hiring one software engineer with a base salary of $120,000. You spend $500 on job ads, $200 on employer branding, $100 on assessments, and $100 on background checks. You do not pay an agency fee, relocation, or signing bonus.

Internally, your recruiter spends 20 hours at $40 per hour, the hiring manager spends 10 hours at $75 per hour, and other interviewers collectively spend 12 hours at $60 per hour. Onboarding includes $2,500 in equipment, 4 HR hours at $35 per hour, 40 hours of training at $50 per hour, and 20 mentor hours at $55 per hour. You also enter 12 weeks to full productivity and choose whether to include productivity loss.

In this scenario, the calculator will:

• Sum all external recruiting costs (ads, branding, assessments, checks).
• Add the internal time costs based on hours × hourly rates.
• Add onboarding and training costs, including equipment and people time.
• Optionally add the estimated productivity loss over 12 weeks.
• Divide the total by the number of hires (1 in this example) and add any ATS cost per hire.

The result is a single cost-per-hire figure you can compare against other roles or past hiring rounds. To explore different strategies, you might run the calculator again assuming the use of an agency, or with a longer or shorter ramp-up period, and see how the output changes.

Ways to use this calculator

• Compare agency vs. in-house sourcing – Run one scenario with an agency fee and another with a higher internal time investment but no agency. Compare cost per hire and consider the trade-off in speed and quality.
• Test the impact of hiring in batches – Increase the number of hires to see how fixed costs (branding campaigns, assessments, some onboarding materials) are amortized, potentially lowering cost per hire.
• Evaluate training and ramp-up strategies – Adjust training hours or weeks to full productivity to understand how more structured onboarding can change the balance between up-front investment and productivity loss.
• Benchmark against internal targets – Use the calculator to set or review cost-per-hire targets by role family, and track how process changes move the numbers over time.

Assumptions and limitations

This calculator is built to provide a practical, directional estimate, not audited financial statements. It relies on several important assumptions:

• Loaded hourly rates – Hourly rates for recruiters, hiring managers, interviewers, HR, and mentors are assumed to include salary plus typical benefits, taxes, and overhead. If they do not, your true cost per hire will be higher than the estimate.
• One-time vs. per-hire costs – Some inputs (for example, a single branding campaign) may support multiple hires. To reflect this, enter the total cost and set the number of hires to match the hiring round so the calculator can spread the spend across those hires.
• Productivity model – Productivity loss is approximated using a simple relationship to salary and ramp-up weeks. It does not capture every nuance of performance, project mix, or manager support.
• Exclusions – Many organizations also incur facility, equipment depreciation, and broader HR systems costs that are not fully modeled here. You can partially capture them by increasing hourly rates or per-hire tool costs, but the result will still be an approximation.
• Industry and region differences – Benchmarks vary significantly by geography, industry, seniority, and labor market conditions. Always compare results to your own historical data where possible.

The structure of this tool aligns with common HR and talent acquisition guidance, such as cost-per-hire frameworks used in SHRM-style analytics. However, it is intended for planning and benchmarking, not for financial reporting, accounting, or legal purposes.

Understanding Cost Per Hire: A Complete HR Metrics Guide

Cost Per Hire (CPH) is a fundamental recruiting metric that measures the total investment required to fill a position. According to the Society for Human Resource Management (SHRM), the average cost per hire in the US is approximately $4,700, but this varies dramatically by role, industry, and seniority level. Understanding your true CPH helps optimize recruiting spend and make better talent acquisition decisions.

The SHRM/ANSI Standard Formula

The Society for Human Resource Management and American National Standards Institute provide a standardized formula:

This formula captures both the obvious external expenses and the often-overlooked internal costs of the hiring process.

External Recruiting Costs Breakdown

External costs are direct expenses paid to outside parties:

Internal Recruiting Costs Breakdown

Internal costs represent staff time and resources dedicated to recruiting:

Calculating Loaded Hourly Rates

To accurately capture internal costs, use loaded hourly rates that include benefits:

The 1.3 multiplier accounts for benefits (typically 25-35% of salary). 2,080 represents standard annual work hours.

Onboarding and Training Costs

The hiring investment doesn't end when someone signs an offer:

• Equipment/Technology: Computers, phones, software licenses ($1,500-$5,000)
• Formal Training: New hire orientation, role-specific training programs
• Informal Training: Mentor time, peer support, manager coaching
• Administrative: IT setup, badge creation, system access provisioning

The Hidden Cost: Productivity Ramp-Up

New employees don't reach full productivity immediately. This "ramp-up" period represents a significant hidden cost:

Typical productivity ramp-up by role:

Industry Benchmarks

Cost per hire varies significantly by industry and role level:

Cost Per Hire as Percentage of Salary

Another useful benchmark is CPH as a percentage of first-year salary:

• Excellent: <10% of salary
• Good: 10-15% of salary
• Average: 15-20% of salary
• High: 20-30% of salary (often with agency fees)
• Very High: >30% of salary (executive search)

Strategies to Reduce Cost Per Hire

1. Build Your Talent Pipeline

• Develop relationships with candidates before positions open
• Maintain alumni networks and boomerang employee programs
• Create internship-to-full-time conversion pathways

2. Optimize Your Employer Brand

• Strong employer brand reduces reliance on expensive job boards
• Employee testimonials and reviews attract passive candidates
• Social media presence can replace paid advertising

3. Implement Employee Referral Programs

Referral hires typically cost 50-75% less and have higher retention:

4. Leverage Technology

• ATS systems streamline candidate management
• AI-powered screening reduces recruiter time
• Video interviews cut scheduling and travel costs

5. Improve Interview Efficiency

• Structured interviews are faster and more predictive
• Panel interviews reduce total rounds needed
• Clear evaluation criteria speed decision-making

Related Recruiting Metrics

Time to Fill

Days from job opening to offer acceptance. Longer times often correlate with higher costs.

Quality of Hire

Performance ratings, retention rates, and hiring manager satisfaction. High CPH may be justified for better quality.

Source Effectiveness

CPH broken down by source (job boards, referrals, agencies) reveals most efficient channels.

Offer Acceptance Rate

Rejected offers waste recruiting investment. Track and improve acceptance rates.

The True Cost of a Bad Hire

While CPH measures the cost of successful hires, bad hires cost significantly more:

• Direct costs: CPH of original hire + CPH of replacement
• Severance and legal: Potential employment disputes
• Lost productivity: Team disruption and management distraction
• Customer impact: Potential damage to relationships or projects

Estimates suggest a bad hire costs 30-50% of annual salary, making quality as important as cost efficiency.

Frequently Asked Questions

Should agency fees be included in CPH?

Yes. Agency fees are a direct cost of acquiring talent and should be included. Track agency vs. non-agency CPH separately for better insights.

How do I allocate costs for batch hiring?

Divide total recruiting costs by number of hires. For example, $50,000 spent to hire 10 people = $5,000 CPH.

Should I include unsuccessful candidate costs?

Yes. The cost of screening rejected candidates is part of finding the right hire. All interviewing costs should be included.

How often should CPH be calculated?

Track monthly or quarterly for operational decisions. Annual calculations are useful for budgeting and benchmarking.

Is a lower CPH always better?

Not necessarily. Cutting corners on recruiting can lead to bad hires, which cost far more in the long run. Balance cost with quality metrics.

Using CPH Data Strategically

1. Budget Planning: Forecast recruiting costs based on hiring plans
2. Vendor Negotiation: Use data to negotiate with agencies and vendors
3. Channel Optimization: Invest more in cost-effective sources
4. Process Improvement: Identify bottlenecks adding to internal costs
5. Executive Reporting: Demonstrate recruiting ROI to leadership

Cost per hire is just one piece of the talent acquisition puzzle. Combine it with quality, speed, and candidate experience metrics for a complete picture of recruiting effectiveness.