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July 9, 2025 
14 min read
Managing recruitment costs isn’t easy, especially for high-volume hiring. Tracking the cost of every move you make to win a great hire means reconciling data, from job marketing to networking and travel costs — often across various disparate systems. This makes it challenging to make sense of what these costs tell you about the success of your recruitment efforts.
You can simplify this process by calculating your cost-per-hire (CPH). This single metric provides valuable insights into your recruiting efficiency and effectiveness, helping you budget for future talent needs.
In this guide, we’ll break down everything there is to know about CPH, so you can fine-tune your recruitment process and even uncover strategies for hiring top talent while paying less.
Cost-per-hire is a recruitment metric that measures the total expenses for hiring employees. It equals the sum of internal and external recruitment costs divided by the number of new hires.
Multiple factors influence CPH, like talent demand, company size, industry and job roles. For example, small businesses’ CPH is usually smaller than that of large enterprises. This is because small companies often lack the multistep hiring processes, dedicated recruitment teams and advanced recruiting software typically found in large corporations with high-volume hiring strategies.
Because CPH involves data from various sources — anything from job board fees to job fair travel expenses — it can be a difficult metric to calculate and track. But including more cost data, even small or hidden expenses, increases the accuracy of your CPH for better recruitment budgeting.
Tracking cost-per-hire is important for enterprises since it:
Speaking of quality of hire, don’t forget the soft skills that set stellar candidates apart from the rest. Explore The soft skills to look for in candidates.
To calculate the cost-per-hire, you need three variables: internal recruiting costs, external recruiting costs and the total number of hires.
Cost-per-hire = (Internal recruiting costs + external recruitment costs) / Total number of hires*
Let’s break down each variable to achieve the most precise CPH below.
Internal recruiting costs refer to any expenses incurred within your organization for recruitment purposes. They represent a significant portion of total recruitment costs and include things like:
Internal recruiting costs refer to any expenses incurred outside your organization for recruitment purposes. Examples include:
By tracking these, you can more effectively budget for your recruitment process and even predict expenses for future talent needs.
Enterprise-grade recruitment software can decrease your cost-per-hire by increasing the efficiency of your recruitment team. With AI screening to surface top candidates and reduce your team’s manual review, check out how iCIMS’ all-in-one hiring platform speeds up your recruitment efforts.
Total number of hires refers to the total number of employees brought into the organization within a specific period, such as a month, quarter, semester or year. Note that the total number of hires includes all hires, regardless of department, role, level or location.
Most ATS and human capital management (HCM) software automatically track the number of new hires for you in their candidate or headcount reports. Alternatively, check with your payroll provider or platform for information on all the new workers you started paying during a specific period.
Pro tip: If you hire a lot of contingent workers, such as independent contractors, freelancers, gig workers or consultants, you can also include them in your cost-per-hire formula for the most accurate calculation of your recruitment fees. You can even categorize your cost-per-hire by employees and contingent workers to see which hires require more resources.
Analyzing your cost-per-hire data in isolation doesn’t provide much insight into the return-on-investment (ROI) of your recruitment process. You need to break down CPH by demographics and data points to identify and address inefficiencies, resulting in more cost-effective hiring.
You can segment CPH data in multiple ways, but the most common include by department, role and recruitment channel.
CPH by department = (Internal + external recruiting costs for the department) / Total number of hires in the department.
Segmenting CPH by department means comparing the costs of hiring workers by different company departments, such as sales, administration and IT. By looking at your CPH by department, you can find which departments use more of your recruitment resources than others and whether these costs are justified.
For example, let’s say your midsize software company’s CPH is highest for the product department compared to the others, like finance and marketing. You may be able to justify the high CPH since the product department:
Historical cost-per-hire data by department also helps you plan future hiring budgets. Using our example, you’d budget more for product hires than finance hires. This approach helps you budget more effectively and avoid unexpected recruitment costs.
CPH by role = (Internal + external recruiting costs for the role) / Total number of hires in the role.
Segmenting CPH data by role drills down your CPH data further to compare recruitment costs by job. Analyzing your CPH by role allows you to identify which roles require more hiring resources to fill.
Returning to our software company example, while the product department has the highest overall CPH, individual roles within that department vary significantly. Software engineers, product designers and quality assurance specialists typically cost more to hire than business data analysts or technical writers. Specialized roles require candidates with advanced technical skills, creating intense competition for limited talent.
Consider the additional expenses associated with hiring for these roles, such as signing bonuses, relocation packages, technical assessments and extended search timelines. Analyzing CPH by role enables you to establish realistic budgets for each position while effectively managing your recruitment team’s expectations.
CPH by recruitment channel = Total expenses for the recruitment channel / Total number of hires sourced from that channel.
Drilling down into your CPH data by recruitment channel allows you to compare your recruitment costs across different candidate sourcing channels. Examples include:
Your CPH data by recruitment channel reveals which recruitment outlets are the most cost-effective, so you can invest in the channels that yield the most hires and less in the ones that don’t.
You can also pair your CPH by recruitment channel with your quality of hire metrics to see which channels produce the best talent for more strategic recruitment budget management.
Pro tip: Compare your CPH with your industry’s average to see if your spending aligns with your competition. You can access the average CPH for different sectors and business sizes with SHRM’s 2022 benchmarking data.
The best method for tracking hiring costs is through an integrated business tech stack that unifies recruitment, hiring, business and financial data across the employee life cycle. In particular, invest in recruiting software that improves ROI and comes with tools for simplifying cost-per-hire calculation.
iCIMS’ Applicant Tracking, for example, comes equipped with a Cost-Per-Hire Report that automatically calculates and segments CPH. What’s more, its Expense Tracking feature allows you to add internal and external recruitment costs to a job profile, such as job board posting and travel expenses, for a holistic view of your recruitment costs in one place.
Beyond its CPH report, iCIMS tracks talent acquisition data points that allow you to execute strategies to reduce costs. You can focus your spending on recruitment channels that yield the best candidates at the lowest price, improving hiring efficiency and allowing for better allocation of recruitment team salaries.
To accurately calculate cost-per-hire, you must determine your total recruitment costs and new hires for a specific period. Then, apply the CPH formula.
First, determine the time period for which you want to calculate your CPH. Common timeframes include a month, quarter and year.
Depending on business needs, you may choose some timeframes over others. For example, if your business sets quarterly talent acquisition goals, use a quarterly timeframe for more targeted recruitment team objectives.
Whatever timeframe you choose, remember to remain consistent for the most accurate CPH. For our purposes, let’s use a year as our timeframe.
Next, you’ll need to gather all of your internal recruiting costs for the past year and add them up. For the most precision, remember to include as many of your relevant costs as possible. You can get this data from your finance or accounting teams, but make sure they focus only on the internal costs related to recruiting.
Let’s say for the past year, you’ve determined the following internal recruiting costs:
| Internal cost | Total |
| Recruitment team compensation packages | $250,000 |
| Overhead and administrative fees | $25,000 |
| Training and development costs | $5,000 |
| Employee referrals | $13,000 |
| Company-sponsored networking event | $500 |
| Candidate relationship management subscription | $15,000 |
| Grand total: | $308,500 |
Like your internal recruiting costs, you’ll need to identify and sum up your external recruiting costs.
Within the past year, let’s say your external recruitment expenses are as follows:
| External cost | Total |
| Job board posts | $20,000 |
| Recruitment agency fees | $15,000 |
| Job opening advertising costs | $5,000 |
| Candidate and recruiter travel expenses | $20,000 |
| Relocation costs | $50,000 |
| Signing bonuses | $10,000 |
| Background checks | $9,000 |
| Coding assessments | $5,000 |
| Job fair | $1,500 |
| Grand total: | $135,500 |
Next, you’ll need to find out how many people you hired within your defined timeframe. This includes all new employees to the company but excludes internal hires and contingent workers.*
You can get this data from either your HR software or payroll team. We’ll say we hired 96 employees over the year.
*Note: You can modify your CPH calculation to determine the costs dedicated solely to contingent workers or internal recruiting. Just isolate recruiting expenses associated with those worker types within your specific timeframe. This provides you with more data to compare the ROI of your various talent needs.
We’ll use the CPH formula to calculate our actual cost-per-hire for the year. Here are our totals from the steps above:
| Variable | Value |
| Total internal recruiting costs for the year | $308,500 |
| Total external recruiting costs for the year | $135,500 |
| Total employees hired for the year | 96 |
Now, let’s add the values to our CPH formula:
Cost-per-hire = (Internal recruiting costs + external recruitment costs) / Total number of hires
Cost-per-hire = ($308,500 + $135,500) / 96 employees
Cost-per-hire = $4,625
Finally, let’s examine how to analyze cost-per-hire to gain meaningful insights.
Monitoring your CPH over time provides a snapshot of your recruitment process’s evolution.
Let’s say we notice that our CPH has been steadily declining over the past five years while maintaining total costs and hiring quality. This suggests that your team improved efficiency by stretching budgets to hire employees faster.
Comparing your CPH to national benchmarks reveals how your recruitment efforts stack up to competitors. Let’s say our fictional company is a software company.
SHRM’s 2022 Benchmarking Talent Access Report shows a mean cost-per-hire of $4,700 across all industries. But technical and communications companies average around $6,500.
Our annual CPH of $4,625 performs well against the general average but below industry peers. This raises the question: are we achieving genuine cost savings, or are competitors outbidding us for top talent?
To identify areas for improvement in your hiring process, break down your cost-per-hire by department, role, recruitment channel, location or pipeline stage.
You might discover that job board costs are increasing, giving you leverage to negotiate better vendor rates. Or you may find minimal spending on recruitment events and job fairs, potentially losing eager, trainable candidates to competitors.
What is clear is that an advanced talent acquisition platform, which provides cost-per-hire chart visualizations, report drill-downs, expense tracking and hiring stakeholder collaboration, is a must to remain agile in today’s hiring environment.
iCIMS Talent Cloud does all of the above, making it strategic and achievable to control the costs of employee turnover.
Tracking cost-per-hire goes beyond budgeting. It’s about identifying process improvements that enhance cost-effectiveness and candidate experience while maximizing recruitment ROI.
And if you have the right technology, figuring out your CPH doesn’t need a calculator and 50 spreadsheets. iCIMS makes calculating and monitoring your CPH in real-time easy for all your recruiting stakeholders.
With centralized recruitment cost tracking, recruitment funnel optimization, internal talent marketplaces and AI-powered analytics, you have the tools to analyze and act on CPH.
Want to upgrade your current recruitment process? Check out The ultimate guide to building a high-converting recruitment funnel.
Alex is well-versed in content and digital marketing. He blends a passion for sharp, persuasive copy with creating intuitive user experiences on the web. A natural storyteller, Alex highlights customer successes and amplifies their best practices.
Alex earned his bachelor’s degree at Fairleigh Dickinson University before pursuing his master’s at Montclair State University. When not at work, Alex enjoys hiking, studying history and homebrewing beer.
