Recruiting Metrics
Cost Per Hire: Formula, Calculator & Benchmarks [2026]
Updated June 2026
9 min read
Free Calculator Included
Cost per hire is the total amount your company spends to fill a single open role. According to SHRM, the median is $1,633 — but the average reaches $4,425. Here's the full formula, how to calculate yours, and how to benchmark against your industry.
What is Cost Per Hire?
Cost per hire (CPH) is a recruiting metric that measures the total expense incurred to hire one employee. It includes every dollar spent in the recruiting process — job postings, agency fees, background checks, assessment tools, and the time your recruiters, hiring managers, and interview panels spend evaluating candidates.
CPH is both a budgeting tool and an efficiency signal. A rising cost per hire without a corresponding improvement in quality suggests an inefficient process. A falling CPH achieved by cutting corners often shows up later as higher attrition or lower quality of hire.
Key SHRM data point: The average cost per hire is $4,425 across all roles — but this varies dramatically by seniority and industry. Tech roles and senior positions can cost 5–10× the average. The median is $1,633 because high-volume entry-level hiring pulls the median down.
The SHRM/ANSI standard formula is the most widely accepted definition in HR benchmarking:
This formula works per individual hire, per department, or company-wide for any time period.
How to Calculate Cost Per Hire: 4 Steps
Step 1: Total all external recruiting costs
External costs are payments to third parties: staffing agency fees (15–25% of salary), job board postings, background checks, skills assessments, candidate travel, signing bonuses, and employee referral payouts.
Step 2: Total all internal recruiting costs
Internal costs are the value of your team's time: recruiter salary pro-rated by hours spent, hiring manager time (sourcing, screening, debrief), interview panel hours, ATS cost per hire, and HR onboarding time.
Step 3: Sum and divide by hires
Add internal + external costs, then divide by the number of successful hires in your measurement period.
Step 4: Calculate as % of salary
Expressing CPH as a percentage of first-year salary helps benchmark across different seniority levels. A $5,000 CPH means very different things for a $40K role vs. a $150K role.
Worked Example — Software Engineer ($110K salary)
External costs: LinkedIn posting $500 + Background check $150 + Technical interview platform $200 + Candidate travel $400 = $1,250
Internal costs: Recruiter 20 hrs @ $45/hr = $900 + HM 8 hrs @ $75/hr = $600 + Panel (4 engineers × 3 hrs @ $65/hr) = $780 + ATS allocation = $120 = $2,400
CPH = ($1,250 + $2,400) ÷ 1 hire = $3,650 (3.3% of annual salary)
Below the SHRM average of $4,425 — efficient, no agency fees used.
Direct vs. Indirect Hiring Costs
Most teams dramatically undercount internal costs, making their CPH look artificially low. Here's a full breakdown:
- Staffing agency fees 15–25% of salary
- Job board subscriptions $200–$2,000/mo
- Background checks $30–$200/hire
- Skills assessments $50–$500/hire
- Candidate travel $200–$2,000
- Signing / relocation $5K–$25K
- Recruiter time 20–60 hrs/hire
- Hiring manager time 10–20 hrs/hire
- Interview panel time 6–18 hrs/hire
- ATS/software allocation $50–$500/hire
- HR onboarding time 4–8 hrs/hire
- Lost productivity (open role) Hard to quantify
Common mistake: Teams that only count external costs report CPH of $500–$1,000. Adding recruiter + HM + panel hours typically triples the real number. The calculator above captures both.
Cost Per Hire Benchmarks by Role & Industry (2026)
| Role Type / Seniority | Avg Cost Per Hire | Notes |
|---|
| Entry-Level / Non-Technical | $1,000 – $3,000 | High volume, lower complexity |
| Mid-Level Technical (Engineer) | $3,500 – $8,000 | Longer pipeline, panel interviews |
| Senior Individual Contributor | $8,000 – $20,000 | Competitive market, sourcing required |
| Engineering Manager / Director | $15,000 – $35,000 | Often uses retained search |
| C-Suite / VP | $30,000 – $100,000+ | Executive search firms (30% of comp) |
| High-Volume (BPO, Retail) | $500 – $1,500 | Streamlined, high throughput |
| SHRM All-Role Average | $4,425 | 2022 Human Capital Benchmarking Report |
| SHRM All-Role Median | $1,633 | 50th percentile across all industries |
CPH as % of Salary
| Annual Salary | Good CPH (~10%) | Agency CPH (~25%) |
|---|
| $50,000 | $5,000 | $12,500 |
| $80,000 | $8,000 | $20,000 |
| $120,000 | $12,000 | $30,000 |
| $180,000 | $18,000 | $45,000 |
What is the 70/30 Rule in Hiring?
The 70/30 rule in hiring is a sourcing strategy that recommends allocating 70% of recruiting effort to active job seekers through scalable, lower-cost channels (job boards, referrals, inbound applications, employer branding) and 30% to passive candidates through high-touch channels (agencies, direct LinkedIn sourcing, executive search).
In budget terms: spend 70% of your recruiting budget on scalable inbound infrastructure and 30% on targeted outbound. This reduces agency dependency — the single biggest driver of high CPH — while keeping a premium channel open for hard-to-fill roles.
How to Reduce Cost Per Hire
- Reduce agency dependency. A single $120K engineer hire via agency costs $18,000–$30,000 in fees alone. Direct sourcing plus a strong employer brand can reduce this to near zero for many roles.
- Build an employee referral program. Referral hires cost 40–60% less than agency hires, accept offers at higher rates, and stay longer. A $3,000 referral bonus still saves $15,000+ vs. agency on a mid-level hire.
- Reduce time-to-hire. Every extra week a role stays open costs recruiter and HM time. Structured interviews with standardized scorecards eliminate redundant rounds — a major hidden CPH driver.
- Audit job board spend. Most companies subscribe to 5–10 job boards and get meaningful hires from 2. Analyze source-of-hire data quarterly and cut underperforming channels.
- Improve quality of hire to prevent backfills. A mis-hire that exits within 6 months doubles your CPH for that role. Better interview processes pay for themselves by reducing premature turnover.
Frequently Asked Questions
What is cost per hire?
Cost per hire is the total amount spent to fill a single open role, including external costs (agency fees, job boards, background checks) and internal costs (recruiter time, hiring manager time, interview panel hours). SHRM reports the average is $4,425 and the median is $1,633.
What is the cost per hire formula?
The SHRM/ANSI standard: CPH = (Total Internal Costs + Total External Costs) ÷ Total Number of Hires. This is the most widely accepted formula for HR benchmarking.
What is the average cost per hire?
According to SHRM's Human Capital Benchmarking Report, the average cost per hire across all roles and industries is $4,425, with a median of $1,633. Tech senior roles and executive hires range from $15,000 to $100,000+.
What is a good cost per hire?
A good cost per hire is 5–15% of the role's annual salary for in-house recruiting, or 15–25% if using agencies. For an $80,000 role, target $4,000–$12,000. The SHRM median of $1,633 skews low because of high-volume entry-level hiring.
What is the 70/30 rule in hiring?
The 70/30 rule recommends allocating 70% of recruiting effort to lower-cost inbound channels (referrals, job boards, employer branding) and 30% to high-touch outbound channels (agencies, direct sourcing). It reduces agency dependency and lowers cost per hire without sacrificing passive talent access.
What is included in cost per hire?
Cost per hire includes: agency fees, job board subscriptions, background checks, assessment tools, candidate travel, signing bonuses, plus internal costs — recruiter salary pro-rated to time, hiring manager time, interview panel time, ATS costs, and HR onboarding time.
How do you calculate cost per hire from salary?
A rule of thumb: cost per hire is typically 5–30% of first-year salary depending on the channel. For an $80,000 role filled in-house: ~$4,000–$8,000 CPH (5–10%). Via agency: $16,000–$20,000 (20–25%). For a $120,000 senior engineer: in-house CPH of $6,000–$12,000; agency $24,000–$30,000. The SHRM formula (internal + external costs ÷ hires) is more precise — use the calculator above for actual figures.
What is cost per hire vs cost per filled position?
They are often used interchangeably but "cost per filled position" may include all roles posted — even those that were never filled (due to cancellation or change in headcount plan). Cost per hire only counts successfully completed hires. "Cost per filled position" is a broader, often less precise metric.
Related HR Calculators