Cost Per Hire Calculator
This calculator helps you determine the average cost incurred to hire one new employee. It's a key recruiting metric to understand efficiency and plan budgets.
Enter your total recruitment costs and the total number of hires made over the same specific period (e.g., a month, quarter, or year). Ensure your costs and hires align with the same timeframe.
Calculate Your Cost Per Hire
Understanding Cost Per Hire (CPH)
What is Cost Per Hire?
Cost Per Hire (CPH) is a key recruiting metric that measures the average expense incurred by an organization to fill an open position. It helps evaluate the efficiency of recruitment processes and can inform budget allocation for talent acquisition.
CPH Formula
The calculation is straightforward:
Cost Per Hire = Total Recruitment Costs / Total Number of Hires
What to Include in Total Recruitment Costs
Calculating total costs can vary, but typically includes both internal and external expenses over the period:
- External Costs: Advertising expenses, job board fees, recruitment agency fees, background checks, relocation costs, recruiting software subscriptions, third-party assessment tools.
- Internal Costs: Salaries for the internal recruiting team (recruiters, coordinators, sourcers, managers), employee referral bonuses, cost of internal interviews (allocated time cost), training costs for new recruiters.
Consistency in what costs you include is more important than using one universal list. Define what "Total Recruitment Costs" means for *your* organization and stick to it.
What to Include in Total Number of Hires
This is usually the total number of candidates who accepted and started a position within the defined period for which you are calculating costs.
Cost Per Hire Examples
Click on an example to see the step-by-step calculation:
Example 1: Small Business Quarterly Hiring
Scenario: A small business hired 5 employees in Q1 and had total recruitment costs of $15,000.
1. Known Values: Total Recruitment Costs = $15,000, Total Number of Hires = 5.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = $15,000 / 5
4. Result: CPH = $3,000.
Conclusion: The average cost to hire one employee was $3,000 in Q1.
Example 2: Large Company Annual Hiring
Scenario: A large company spent $1,200,000 on recruitment last year and made 200 hires.
1. Known Values: Total Recruitment Costs = $1,200,000, Total Number of Hires = 200.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = $1,200,000 / 200
4. Result: CPH = $6,000.
Conclusion: The company's average Cost Per Hire last year was $6,000.
Example 3: High-Volume Retail Hiring (Monthly)
Scenario: A retail chain hired 30 new associates last month with costs totaling $45,000 (mostly advertising and background checks).
1. Known Values: Total Recruitment Costs = $45,000, Total Number of Hires = 30.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = $45,000 / 30
4. Result: CPH = $1,500.
Conclusion: The CPH for retail associates last month was $1,500.
Example 4: Executive Search
Scenario: Hiring one executive through an agency cost $75,000 in fees and associated expenses.
1. Known Values: Total Recruitment Costs = $75,000, Total Number of Hires = 1.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = $75,000 / 1
4. Result: CPH = $75,000.
Conclusion: Hiring this executive had a CPH of $75,000 (as expected for senior roles).
Example 5: Tech Startup Rapid Growth
Scenario: A startup hired 15 engineers in a quarter with costs including significant recruiter salaries and sourcing tools, totaling $120,000.
1. Known Values: Total Recruitment Costs = $120,000, Total Number of Hires = 15.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = $120,000 / 15
4. Result: CPH = $8,000.
Conclusion: The average CPH for engineers during this rapid growth phase was $8,000.
Example 6: Calculating for a Specific Department
Scenario: The marketing department hired 3 people last year, with specific marketing recruitment costs (allocated recruiter time, specific job ads) totaling $18,000.
1. Known Values: Total Recruitment Costs (Marketing) = $18,000, Total Number of Hires (Marketing) = 3.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = $18,000 / 3
4. Result: CPH = $6,000.
Conclusion: The CPH specifically for the marketing department was $6,000.
Example 7: Using Different Currency
Scenario: A company in Europe spent €80,000 on recruitment and hired 25 people in a quarter.
1. Known Values: Total Recruitment Costs = €80,000, Total Number of Hires = 25.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = €80,000 / 25
4. Result: CPH = €3,200.
Conclusion: The average CPH in Euros was €3,200 (the calculator is currency-agnostic, just ensure consistency).
Example 8: Accounting for Employee Referrals
Scenario: In a period with $50,000 in total costs and 20 hires, 4 hires came from employee referrals, each receiving a $1,000 bonus. Total costs include the $4,000 in bonuses.
1. Known Values: Total Recruitment Costs = $50,000, Total Number of Hires = 20.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = $50,000 / 20
4. Result: CPH = $2,500.
Conclusion: The average CPH is $2,500, demonstrating how referral bonuses factor into the total cost.
Example 9: When Number of Hires is Low
Scenario: A specialized company hired only 2 people in a year, but had ongoing recruitment costs (subscriptions, recruiter time) of $40,000.
1. Known Values: Total Recruitment Costs = $40,000, Total Number of Hires = 2.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = $40,000 / 2
4. Result: CPH = $20,000.
Conclusion: With fewer hires, the fixed costs contribute to a higher CPH ($20,000).
Example 10: Using Fractional Costs/Hires (e.g., shared recruiter time)
Scenario: A fractional recruiter costing $10,000 filled 3.5 positions over a period (meaning some roles are still pending or shared). Total costs including other items are $12,000.
1. Known Values: Total Recruitment Costs = $12,000, Total Number of Hires = 3.5.
2. Formula: CPH = Total Costs / Total Hires
3. Calculation: CPH = $12,000 / 3.5
4. Result: CPH ≈ $3,428.57.
Conclusion: CPH can use fractional hires/costs if your accounting allows for it, giving an average per whole hire.
Measuring Recruitment Efficiency
CPH is a valuable metric, but should be considered alongside other factors like Time to Hire, Quality of Hire, and Source of Hire to get a complete picture...
Standard vs. Fully-Loaded CPH
Be aware that different companies calculate CPH differently. Some use a simple formula (Standard CPH), while others include a wider range of costs (Fully-Loaded CPH). Ensure consistency in your own reporting...
Frequently Asked Questions about Cost Per Hire
1. What is Cost Per Hire (CPH)?
CPH is a recruiting metric that calculates the average expense a company incurs to hire a new employee over a specific period.
2. How is CPH calculated using this tool?
You input the total recruitment costs and the total number of hires for the same period. The tool divides the total costs by the total hires to give you the average cost per hire.
3. What kind of costs should I include?
Include all costs related to recruitment during the period, such as advertising, job board fees, agency fees, recruiter salaries (or a portion allocated to hiring), employee referral bonuses, background checks, and assessment tools.
4. What kind of hires should I include?
Typically, this includes all full-time, part-time, and sometimes contract employees who accepted an offer and started during the measurement period. Be consistent in who you count as a "hire".
5. Why is calculating CPH important?
It helps businesses understand the financial investment in recruitment, compare efficiency over time or across departments, justify recruitment budgets, and identify areas to potentially reduce costs.
6. What is a "good" Cost Per Hire?
There's no single "good" CPH. It varies significantly by industry, role type (entry-level vs. executive), location, and company size. Benchmarking against similar companies or tracking your own trend is more useful.
7. How often should I calculate CPH?
Most companies calculate CPH quarterly or annually to track trends and align with budgeting cycles. Monthly calculations can be useful for high-volume hiring or specific campaigns.
8. Can I use this calculator for different currencies?
Yes, the calculator works regardless of currency. Just ensure that both your Total Recruitment Costs and the resulting Cost Per Hire are in the same currency unit (e.g., all in USD, or all in EUR).
9. Does CPH include salary?
No, CPH only includes the costs *to make* the hire, not the salary paid *to* the employee once they are hired. Salary is an operational cost, not a recruitment cost.
10. What is the difference between Standard CPH and Fully-Loaded CPH?
Standard CPH often includes only direct external costs (like agency fees, ads). Fully-Loaded CPH includes a broader range, adding internal costs like recruiter salaries and allocated overhead, providing a more comprehensive picture.
