Enter the total internal recruiting costs, total external recruiting costs, and the total number of new hires to calculate the cost per hire.

Cost Per Hire Formula

The following formula is used to calculate the cost per hire. 

CPH = (TIR + TER) / H
  • Where CPH is the cost per hire
  • TIR is the total internal recruiting costs
  • TER is the total external recruiting costs
  • H is the total number of new hires

To calculate the cost per hire, sum the internal and external recruiting costs, then divide by the number of new hires.

Cost Per Hire Definition

A cost per hire is defined as the total expense of hiring one individual for a company.

Cost Per Hire Example

How to calculate cost per hire?

  1. First, determine the total internal costs.

    Calculate the total internal hiring costs over a time period.

  2. Next, determine the total external costs.

    Calculate the total external recruiting costs over the same time period.

  3. Next, determine the number of new hires.

    Measure the total number of people hired during the time period.

  4. Finally, calculate the cost per hire.

    Calculate the cost per hire using the equation above.

FAQ

What factors contribute to internal recruiting costs?

Internal recruiting costs may include expenses related to the internal recruitment team’s salaries, internal job postings, recruitment software subscriptions, and internal referral programs.

How can companies reduce their cost per hire?

Companies can reduce their cost per hire by optimizing their recruitment process, leveraging employee referrals, using cost-effective recruitment channels, and improving employee retention to reduce the need for frequent hiring.

Why is it important to calculate the cost per hire?

Calculating the cost per hire is important for organizations to understand the effectiveness of their recruitment strategies, budget accurately for future hiring needs, and identify areas where they can improve efficiency and reduce costs.

cost per hire calculator
cost per hire formula