What is cost per hire?

Cost per hire measures the total cost of filling one open role. The formula is (external recruiting costs + internal recruiting costs) ÷ total hires for the period you’re measuring — for example, $45,000 in combined advertising, agency, and internal recruiter costs divided by 15 hires in a quarter is $3,000 per hire. Cost per hire starts with cost per applicant; our 2026 benchmark gives that number by role across 891 frontline campaigns.

How do you calculate the cost per hire?

Add up external and internal costs for the period, then divide by hires. The seven cost categories that go into the total:

Advertising costs: Expenses related to job postings on job boards, social media platforms, or other advertising channels.

Agency fees: Costs associated with hiring external recruitment agencies or headhunters to source and screen candidates.

Internal recruiter costs: Salaries, benefits, and other expenses for in-house recruiters involved in the hiring process.

Candidate expenses: Reimbursements for travel, accommodation, and other expenses incurred by candidates during the interview process.

Technology and tools: Costs for applicant tracking systems (ATS), recruitment software, or any other technology used in the recruitment process.

Employee referral programs: Bonuses or incentives offered to existing employees who refer successful candidates.

Onboarding expenses: Costs related to training, orientation, and other activities to integrate new hires into the organization.

Total every category above for the period, then divide by the number of hires in that same period. A lower cost per hire means a more cost-effective recruiting process; a higher one usually means inefficiency somewhere in the funnel — often the advertising or agency line, since those are the most variable of the seven.