Cost per hire: How to calculate & reduce recruiting expenses

Recruiting great people is often expensive. The amount of time, energy, and attention it takes to find the right hire is significant, and your resources can quickly become a serious issue. 

As companies tighten budgets and expect teams to do more with less, recruiters are under pressure to deliver high-quality hires while keeping costs low. That’s why understanding and managing your cost per hire has become one of the most important ways to demonstrate the efficiency and impact of your talent function.

Cost per hire reveals how much it really costs your company to bring in a new employee, from job ads and recruiter time, to onboarding and training. Tracking and optimizing it helps you make data-driven decisions, identify inefficiencies, and ultimately show how well your recruiting investments are performing.

In this guide, we’ll break down exactly how to calculate your cost per hire, explore what drives it up, and share proven strategies to help your team hire faster and at lower costs.

3 key takeaways

• Cost per hire is a holistic measure: Cost per hire combines both internal and external recruiting expenses, giving you a true picture of what it costs to fill a role.
• Identify and address inefficiencies: Analysis helps uncover hidden costs like slow interview cycles and high agency fees, and highlights opportunities to streamline.
• Use AI to scale smarter: Automation and insights help recruiting teams save time, make better decisions, and show measurable ROI on every hire.

What is cost per hire?

Cost per hire (CPH) is a common HR and recruiting metric used to calculate the total cost invested to fill an open position. It captures both external costs (such as job ads, agency fees, and assessments) and internal costs (like recruiter time, HR tools, and onboarding).

Essentially, cost per hire tells you how efficient your recruiting process is and whether your investments are generating strong returns. A lower CPH suggests you’re hiring efficiently, while a higher CPH may point to inefficiencies or overdependence on costly channels.

By tracking cost per hire regularly, you can benchmark performance, justify budgets to leadership, and identify opportunities to make hiring more strategic and sustainable.

How to calculate cost per hire

The formula for cost per hire is simple, but what it reveals can be transformative.

The standard cost per hire formula is:

Cost per hire (CPH) = (Total internal recruiting costs + Total external recruiting costs) / Number of hires in a given period

This equation gives you an average cost of each new hire, whether you’re measuring across a month, a quarter, or a full year. Tracking this number over time helps you see whether your recruiting spend is delivering value, and how changes in process, technology, or team structure affect the bottom line.

For example, if your company spends $150,000 on total recruiting expenses in a quarter and hires 10 employees, your cost per hire would be $15,000.

Internal recruiting costs may include

• Recruiter and hiring manager salaries (time spent sourcing, interviewing, and reviewing candidates)
• Internal referral bonuses
• Recruitment software and ATS subscriptions
• Onboarding and training costs
• Employer branding activities managed in-house

External recruiting costs may include

• Agency or headhunter fees
• Job board postings and advertising spend
• Background checks and pre-employment assessments
• Career fair participation or sponsorships
• External recruitment marketing campaigns

Practical ways to reduce your hiring costs

Even small changes in how you attract, evaluate, and hire talent can make a big difference to your overall cost per hire. Here are eight effective strategies to lower recruiting spend without compromising on quality.

1. Strengthen your employer brand

A strong employer brand attracts great candidates before you even start recruiting. Companies like HubSpot and Canva invest heavily in showcasing employee stories and career growth opportunities on LinkedIn and their careers pages. As a result, they receive thousands of inbound applications. 

Highlight what makes your company a great place to work: career development, flexible working policies, diversity initiatives, or team culture. This helps reduce reliance on costly job ads and agencies, because talent already wants to work with you.

2. Build and nurture talent pipelines

Top-performing recruiting teams treat hiring as an ongoing process, not a one-time event. You need to keep your pipeline full, and find thoughtful ways to engage potential future candidates while the right role isn’t available (yet).

Send occasional updates or invitations to events, so your company stays top of mind. When a new role opens, you’ll already have a shortlist of qualified, engaged candidates — dramatically reducing time-to-hire and sourcing costs.

Note: Good ATS tools (like Ashby, Greenhouse, or Lever) make it easy to track silver medalists, previous applicants, and passive candidates who’ve shown interest in the past. 

3. Optimize your sourcing channels

Different roles demand different sourcing strategies. For instance, engineering hires may be best found through GitHub, Stack Overflow, or Wellfound, while sales or marketing talent may come from LinkedIn or Hired. 

Regularly review analytics from your ATS to see which sources generate not just the most applicants, but the best hires. Then, shift spend away from underperforming channels and double down on those that consistently deliver. This simple data-driven move can save thousands per quarter.

Even better, fill your pipeline automatically with AI Sourcing tools. These are typically cheaper upfront than a LinkedIn Recruiter profile (or equivalent), but they do all the heavy lifting for you. So you’re saving on human resources, too. 

4. Automate manual recruiting tasks

Precious hiring resources are too often devoted to manual, repetitive, and (relatively) low-value tasks. From typing up interview notes to scrolling through candidate profiles, to sending meeting reminders and other minor touchpoints, each minor moment adds up.

Which makes automation tools some of the most effective cost-savers in modern recruiting. Platforms like Calendly and Greenhouse can schedule calls, email reminders, and candidate follow-ups, while Metaview automates interview notetaking. 

AI-powered screening can automatically prioritize top candidates, freeing recruiters to focus on relationship-building instead of inbox management. And we’ve already mentioned the value of AI sourcing platforms. 

Teams that automate key workflows report faster hiring cycles and measurable reductions in operational costs. Plus, they avoid the typical headaches and frustrations that come from doing the same tasks over and over. 

5. Prioritize employee referrals

Referrals are typically five times cheaper than agency hires and lead to stronger retention rates. Encourage your team to refer people they admire by offering transparent, meaningful rewards — even small bonuses, charity donations, or internal recognition can make a difference. Use referral tools like Teamable or Firstbird to make participation easy and track results. Every great referral is one less external placement fee, one faster hire, and one stronger culture fit.

6. Use data to improve hiring decisions

Cost per hire is obviously a key data point in and of itself. But there are a range of finer inputs which can also expose opportunities to keep costs and time investment down. 

For example, if you discover that one interview stage adds unnecessary delays, or that certain job boards yield low-quality hires, you can adjust and save both time and money. Relatively simple metrics like time to hire and time to fill are great ones to start with. 

Of course, your analysis also needs to be easy and efficient. Good dashboards (like Metaview’s AI Reports) can surface these patterns automatically. 

When you track recruiting analytics effectively, inefficiencies become obvious. With every hiring cycle, you’ll find new ways to refine your approach and improve ROI without cutting corners.

7. Partner with & coach hiring managers

A strong recruiter–hiring manager partnership eliminates misunderstandings that lead to wasted effort. When recruiters and hiring managers collaborate tightly, you reduce back-and-forth, speed up decisions, and cut the number of interviews per hire.

Hold structured intake meetings before each search to align on must-have criteria, success metrics, and interview scorecards. Help them craft the right interview questions, and ensure that hiring managers have the bandwidth and focus they need to commit fully to the process. 

You need to strike the right communication balance between helpful and overwhelming. Think about empowering and unblocking hiring managers for success, rather than micromanaging.

8. Train better interviewers

This is hard to measure accurately, but we’d bet that poor interviewing is one of the most expensive problems in hiring. It leads to inconsistent assessments and costly mis-hires. And even once the problem is identified, it requires a lot of handholding from talent teams to get overcome. 

Regular interviewer training, including shadowing programs and AI-driven feedback, helps interviewers learn from top performers and make data-backed evaluations. Structured interview training also reduces bias and improves candidate experience. 

Better-trained interviewers make faster, more confident decisions. Just as importantly, you save money while raising the bar for every hire.

How AI and automation bring hiring costs down

It can feel like recruiting is getting more complicated, and less people-centric. Talent teams tend to talk more about KPIs and ROI than the deep interactions they have each day. 

So talking about artificial intelligence may give you the ick. But in truth, automation (and AI in particular) is the exact thing you need to put human connection at the center of your recruiting processes. 

These tools let talent teams drastically reduce manual work, eliminate process inefficiencies, and make smarter decisions faster. Instead of spending hours on repetitive admin, recruiters can focus on what truly matters: building relationships and closing great hires.

AI won’t take your job; it’ll make you much, much better at it. 

Here are a few key ways AI and automation reduce hiring costs across the funnel:

• Automated sourcing: AI can identify and rank qualified candidates from millions of profiles across dozens of platforms. You get matches in seconds instead of hours.
• Smart screening: Natural language processing (NLP) tools analyze resumes, interview transcripts, and assessments to highlight top candidates faster. So recruiters focus on quality rather than quantity.
• Streamlined scheduling: Automated scheduling tools prevent endless back-and-forth emails and keep interviews moving smoothly, reducing time to hire (and therefore cost per hire).
• Interview analytics: AI transcription and analysis tools surface themes, skills, and behavioral trends from interviews automatically. They turn unstructured and seemingly subjective impressions into consistent, usable data.
• Continuous optimization: Real-time analytics let you identify bottlenecks or drop-off points in your hiring process, so you can refine operations and save both time and resources continuously.

AI essentially functions as a force multiplier for recruiting teams. You can not only do more on a smaller budget, you get extra perspectives and insights you’d otherwise need to staff for. All while maintaining a great candidate experience.

How Metaview brings clear hiring ROI

Metaview is designed to make every interview and decision more efficient, and every hire more cost effective.

By automatically recording, transcribing, and analyzing interviews, Metaview captures the “why” behind hiring decisions that traditional tools miss. Recruiters and hiring managers get structured insights into candidate performance, common objections, and alignment with role requirements, without taking notes or manually compiling feedback.

Here’s how that translates into measurable ROI:

• Less time per hire: With automated notetaking and structured interview summaries, recruiters can review and progress candidates faster.
• Higher quality decisions: AI highlights consistent themes and red flags across interviews, reducing costly mis-hires.
• Faster feedback loops: Hiring managers can review interviews instantly and make decisions without delay.
• Smarter interviewer development: Metaview insights help identify where interviewers can improve, ensuring better hiring consistency and reducing time wasted on poor assessments.
• Better alignment across teams: Everyone involved has access to the same structured data. So no more confusion or duplicate effort.

In short, Metaview helps recruiting teams cut both direct costs (time, tools, agencies) and indirect ones (bad hires, process inefficiency).

Reduce your cost to hire today

Every hiring decision costs, whether directly or indirectly. But with the right systems and technology in place, that cost can shrink dramatically. By tracking your cost per hire, optimizing your processes, and embracing automation, you save money and improve quality, consistency, and speed across every role you fill.

Tools like Metaview make this process even more efficient, giving you data-driven insights, faster feedback, and measurable ROI from every interview.

Now’s the time to bring efficiency and intelligence into your hiring engine. Try Metaview for free and see the cost savings (and quality improvements) for yourself.

FAQs about cost per hire

1. What is considered a good cost per hire?

There’s no universal benchmark; it varies by industry, company size, and role type. According to SHRM data, the average cost per hire in the U.S. is around $4,700, though executive or technical roles can easily exceed $10,000–$20,000. The goal isn’t just to hit a specific number, but to ensure your costs show real ROI on recruitment, and hiring quality. And to keep reducing costs where possible, of course. 

2. How often should I calculate cost per hire?

Ideally, review it quarterly. This gives enough data to spot trends without waiting too long to correct inefficiencies. For high-volume hiring teams, monthly reviews can help identify issues earlier—for example, rising ad spend or declining referral participation.

3. Does automating recruiting always reduce costs?

Automation nearly always leads to savings, but the biggest benefits come from how you use it. For instance, automating interview scheduling or notetaking saves time, while using AI analytics (like Metaview’s insights) prevents costly mis-hires. The key is to balance automation with a strong human touch in decision-making.

4. What’s the difference between cost per hire and cost per applicant?

Cost per hire measures the total spend divided by the number of successful hires, while cost per applicant looks at spend divided by all candidates entering your funnel. Tracking both helps you understand not only how efficiently you hire but also how effectively you attract qualified applicants.

5. Can improving candidate experience lower cost per hire?

Yes, because happier candidates usually mean fewer dropouts and faster acceptances. A smooth, transparent process reduces wasted effort and increases the chances that your first-choice candidate says yes, cutting down on restarts and duplicate costs.