Cost per Hire Calculator
Calculate your true recruiting costs using the SHRM formula. Break down internal and external expenses, compare against the industry average of $4,700, and find ways to optimize your hiring budget.
Recruiting Expenses
Enter total costs across all hires for the period.
Your Cost per Hire
Cost Breakdown
Industry Benchmarks
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tinyteam's built-in recruiting tools help small teams streamline hiring, track applicants, and onboard new employees — all without expensive agency fees or bloated enterprise software.
Understanding Cost per Hire: The Complete Guide
Cost per hire is one of the most critical recruiting metrics tracked by HR professionals worldwide. Defined by the Society for Human Resource Management (SHRM) and the American National Standards Institute (ANSI), it measures the total investment required to bring a new employee on board — covering everything from job board postings to their first day of onboarding.
The SHRM Cost per Hire Formula
The industry-standard formula endorsed by SHRM is:
Cost per Hire = (Internal Costs + External Costs) ÷ Total Number of Hires
Internal costs are expenses generated within your organization: recruiter salaries, hiring manager time, employee referral bonuses, onboarding programs, and HR technology. External costs are paid to third parties: job boards, staffing agencies, background check vendors, career fairs, and recruitment advertising.
What's Included in Cost per Hire?
A comprehensive cost-per-hire calculation should include these categories:
- Job Board Fees: Indeed, LinkedIn Jobs, ZipRecruiter, and niche industry boards. Costs range from $200–$500 per posting, with premium placements running $1,000+
- Recruiter & Agency Fees: External recruiters typically charge 15–25% of the hire's first-year salary. For a $100K role, that's $15,000–$25,000 — often the single largest recruiting expense
- Employee Referral Bonuses: Most companies pay $1,000–$5,000 per successful referral. Despite the cost, referral hires have the highest retention rates and lowest cost per hire
- Interview Costs: Includes interviewer time (opportunity cost), candidate travel reimbursement, meals, and scheduling tool subscriptions
- Background Checks: Criminal checks, employment verification, credit checks, and drug screening typically cost $30–$100 per candidate
- Onboarding: New hire training, equipment provisioning, IT setup, orientation programs, and administrative processing
Industry Benchmarks: How Does Your Cost per Hire Compare?
SHRM's benchmark study puts the average cost per hire at approximately $4,700, but this varies enormously by industry, role level, and company size:
- Technology: $5,000–$8,000+ (highly competitive talent market with premium salaries)
- Healthcare: $5,500–$7,500 (credential verification, licensing, specialized recruiting)
- Financial Services: $4,500–$6,500 (compliance requirements, specialized skills)
- Retail & Hospitality: $1,500–$3,000 (high volume, lower complexity)
- Executive Roles: $14,000+ (retained search firms, extensive vetting process)
How to Reduce Your Cost per Hire
Reducing cost per hire doesn't mean cutting corners — it means optimizing your process:
- Strengthen employee referrals: Referral hires cost 50% less on average and have 45% higher retention after two years. A strong referral program is the single highest-ROI recruiting investment
- Invest in employer branding: Companies with strong employer brands see 50% more qualified applicants and spend 43% less per hire (LinkedIn data)
- Optimize job descriptions for SEO: Well-written, keyword-optimized postings attract organic traffic, reducing reliance on paid job board promotions
- Reduce time to hire: Every extra week in the hiring process increases costs. Streamline interview stages and make decisions faster
- Build talent pipelines: Maintain relationships with past applicants and passive candidates so you don't start from scratch for every open role
- Use integrated HR tools: An all-in-one platform eliminates the cost of multiple point solutions (separate ATS, onboarding, and HRIS tools)
Tracking cost per hire over time — and breaking it down by department, role level, and source — reveals where your biggest inefficiencies lie. Our free calculator above gives you a quick snapshot, but for ongoing tracking, tinyteam's HR platform provides automated recruiting analytics, applicant tracking, and onboarding management designed specifically for small teams.
Frequently Asked Questions
What is the cost per hire formula?
The SHRM-standard cost per hire formula is: Cost per Hire = (Total Internal Recruiting Costs + Total External Recruiting Costs) ÷ Total Number of Hires. Internal costs include recruiter salaries, referral bonuses, and interview time. External costs include job boards, agency fees, background checks, and recruitment marketing.
What is the average cost per hire in the US?
According to SHRM (Society for Human Resource Management), the average cost per hire in the US is approximately $4,700. However, this varies widely by industry, role level, and location. Executive hires can cost $14,000+, while entry-level positions may cost $1,500–$3,000. Tech and healthcare roles tend to have higher costs due to competitive talent markets.
What counts as an internal recruiting cost?
Internal recruiting costs are expenses generated within your organization. These include in-house recruiter salaries and benefits, hiring manager interview time, employee referral bonuses, internal talent acquisition tools (ATS software), onboarding and training programs, and HR administrative overhead related to the hiring process.
What counts as an external recruiting cost?
External recruiting costs are paid to third parties. Common examples include job board posting fees (Indeed, LinkedIn, ZipRecruiter), external recruiting agency or staffing firm fees, background check and drug screening vendors, career fair participation, recruitment advertising and employer branding, and relocation expenses for new hires.
How can I reduce my cost per hire?
Key strategies include building a strong employee referral program (referral hires cost 50% less on average), investing in employer branding to attract inbound applicants, optimizing job descriptions for organic search visibility, using an ATS to streamline workflows and reduce time-to-hire, building a talent pipeline for recurring roles, and negotiating volume discounts with job boards.
What is time to hire and how does it affect cost per hire?
Time to hire measures the days between a candidate applying and accepting an offer. Longer hiring timelines increase cost per hire because job postings run longer, more recruiter hours are spent, and you may lose candidates to competitors — forcing you to restart the process. The average time to hire across industries is 36–44 days. Reducing it by even a week can significantly lower costs.
