Updated 2026-09-16
Cost per hire is the total internal and external recruiting expense incurred to make hires in a given period, divided by the number of hires in that period — the standard formula recruiting teams use to measure how expensive each successful hire was to obtain.
The Society for Human Resource Management (SHRM) and many HR analytics teams use a straightforward definition: add all internal and external recruiting costs for a period, then divide by the number of hires in that same period. Internal costs include recruiter compensation attributable to hiring, hiring manager time spent interviewing, HR administration, and recruiting technology allocated to the effort.
External costs include agency fees, job board spend, career fair booths, referral bonuses paid, background checks, relocation assistance, and signing bonuses treated as recruiting expense. What you include should stay consistent quarter to quarter so trends are meaningful — changing definitions makes year-over-year comparison misleading.
Cost per hire is an average, not a per-candidate invoice. One hard-to-fill engineering role with a hefty agency fee raises the average for that quarter even if warehouse hires were cheap. Segment CPH by role family, geography, and channel when reporting to leadership.
| Typically included | Often excluded or debated |
|---|---|
| Recruiter salary portion | Full HR department overhead |
| Hiring manager interview time (if costed) | Training post-hire |
| Agency / RPO fees | New hire salary (except vacancy cost models) |
| Job ads and events | Employee referral reward (sometimes included) |
| Assessment and interview tools | Onboarding software |
| Background checks pre-offer | Equipment issued on day one |
Some finance models add vacancy cost — revenue or productivity lost while a seat stays empty — to recruiting spend when calculating a loaded cost of hiring delay. A common simplified estimate divides annual role salary by working days in a year to approximate daily vacancy cost, then multiplies by days the requisition was open.
This is not part of the classic SHRM CPH formula but helps justify investments that shorten time to fill. Automated screening that cuts thirty days off a hard-to-fill nursing requisition may save more in vacancy cost than it spends in tool fees — but only if your organisation actually tracks vacancy impact credibly.
Use our free hiring cost calculator to model CPH from your own inputs — recruiter hours, panel time, tools, agency fees — without relying on invented industry averages.
Published benchmarks vary by source, role, and geography. Use your own historical data segmented by role type rather than citing a single global average as if it applied to your warehouse and your engineering hires equally.
Most models allocate a portion of recruiter time to hiring versus other HR work. Fully loaded salary for recruiters who only hire is often counted entirely.
Cost per applicant divides spend by total applicants — useful for sourcing efficiency. CPH divides by hires only — useful for end-to-end funnel economics.
Often yes — more recruiter hours, more panel interviews, more tool subscription time spread across fewer completed hires if the funnel leaks, and potentially higher vacancy costs.
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