Glossary
A plain-language definition from the Curriculo hiring glossary.
Cost per hire is the average amount a company spends to fill one position, counting both internal and external hiring costs.
The formula
Cost per hire = (total internal costs + total external costs) / total number of hires.
This is the method in the ANSI and SHRM cost per hire standard. Use the same time period, often a quarter or a year, for both costs and hires.
What counts as a cost
- Internal: recruiter salaries, time hiring managers spend interviewing, referral bonuses, and in-house tools.
- External: job board fees, agency fees, ATS subscriptions, background checks, assessments, travel, and relocation.
Why it matters
Cost per hire shows where your hiring money goes. It helps you compare channels, plan budgets, and spot waste, such as paying an agency for roles your own referrals could fill. Senior roles usually cost far more to fill than junior ones.
A worked example
In one quarter, a startup spends $18,000 on internal time and $12,000 on job ads, an ATS, and one agency fee. It makes six hires. Cost per hire is ($18,000 + $12,000) / 6, or $5,000.
Now split it by channel. Say the agency fee was $9,000 for one hire. That hire cost far more than the five from referrals and the careers page.
Common mistakes
- Leaving out the time hiring managers spend in interviews.
- Counting costs from one period and hires from another.
- Chasing the lowest cost per hire and ignoring quality of hire.
- Paying per seat for tools, so cost rises with every new interviewer.
Use the cost per hire calculator, read the full cost per hire guide, and compare it with time to hire.