What is Cost Per Hire?
Definition: Cost Per Hire (CPH) is a recruiting metric measuring the total investment in hiring (internal and external costs) divided by the number of hires made, used for budgeting, benchmarking, and optimization.
Also known as: CPH, Hiring Cost, Recruitment Cost, Cost of Hire
Quick Summary
TL;DRCost Per Hire (CPH) is the total cost of recruitment divided by the number of hires. It includes both internal costs (recruiter salaries, technology) and external costs (agency fees, job boards, advertising). SHRM benchmarks average CPH at $4,700, but this varies dramatically by role level, industry, and methodology.
Key Facts
What It Measures
Total recruiting cost / hires
Metric definition
Average CPH
$4,700
SHRM benchmark
Variation
$500 to $50,000+
Role-dependent
Key Components
Internal + external costs
Calculation method
Why Cost Per Hire Matters
Recruiting is expensive, but most organizations don't know their true costs. Without CPH tracking, you can't optimize spending, compare channels, or justify investments. For staffing agencies, understanding client CPH helps position your value proposition—agency fees often compare favorably to true internal hiring costs.
Common Pain Points
- 1Unknown true cost of hiring internally
- 2Unable to compare recruiting channel ROI
- 3Difficulty justifying recruiting investments
- 4No basis for cost optimization
How to Calculate Cost Per Hire
Include all relevant costs for accurate measurement.
- 1
Calculate Internal Costs
Recruiter salaries and benefits, hiring manager time, interview time (all participants), ATS and technology costs, training for hiring teams.
- 2
Calculate External Costs
Agency fees, job board subscriptions, advertising spend, background checks, assessment tools, travel for interviews, relocation assistance.
- 3
Sum and Divide
CPH = (Internal Costs + External Costs) / Number of Hires. Calculate for defined time period (typically annually or quarterly).
- 4
Segment Analysis
Track CPH by role level, department, source, and recruiter. Aggregates hide important variations. Executive CPH differs dramatically from entry-level.
Result
Accurate CPH requires comprehensive cost capture and meaningful segmentation.
Cost Per Hire Deep Dive
CPH Benchmarks by Role
Average CPH varies enormously by role complexity. Entry-level positions may cost $1,000-$3,000. Professional roles average $4,000-$8,000. Technical/specialized positions reach $10,000-$20,000. Executive searches can exceed $50,000. Compare to appropriate benchmarks, not general averages.
CPH vs Quality
Optimizing for lowest CPH alone is dangerous. Cheap hires who turnover quickly or underperform cost far more than higher CPH quality hires. Always evaluate CPH alongside quality-of-hire metrics, retention rates, and time-to-productivity. The goal is optimal CPH, not minimum.
Agency Fees in Context
Staffing agency fees (typically 15-25% of salary) often seem expensive until compared to true internal hiring costs. When companies include all internal costs—recruiter time, technology, hiring manager time, vacancy costs—agency fees frequently compare favorably, especially for hard-to-fill roles.
Common Misconceptions
- CPH should be minimized at all costs
- Only external costs should be counted
- One benchmark applies to all roles
- Agency fees are always more expensive than internal hiring
CPH Components
| Cost Category | Examples | Typical % |
|---|---|---|
| Internal - People | Recruiter, HR, hiring manager time | 35-45% |
| Internal - Technology | ATS, assessments, tools | 10-15% |
| External - Sourcing | Job boards, LinkedIn, ads | 20-30% |
| External - Vendors | Agency fees, background checks | 15-25% |
| External - Other | Travel, relocation, signing bonus | Variable |
Internal vs External costs
Related Terms
Frequently Asked Questions
Related Resources
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