Anyone who has grown a team knows that recruitment is not cheap, and that the invoice from the job board is the smallest part of it. The real cost of a hire includes the time your own people spend, the output you lose while the role is empty and the price of getting it wrong. This guide sets out the components, how to calculate your own cost per hire and where employers reliably reduce it.
What is the recruitment cost?
Recruitment cost, or cost per hire, is everything you spend from deciding to fill a role to the new person being productive. It has direct costs you can read off invoices and indirect costs you have to estimate. Most published averages count only the first kind, which is why they look low.
What is the average cost of recruitment?
Published averages vary widely by country, sector and seniority, and they date quickly. Rather than rely on a single figure, work out your own using the components below; for most small and mid-sized employers the result for a mid-level role runs into thousands of pounds before the hidden costs are counted, and much more once they are.
Five examples of recruitment costs
1. Job board and advertising fees
Posting a vacancy on a job board or promoting it on social media is usually priced per posting or per click. It is the most visible cost and rarely the largest. Advertising brings volume; it does not bring fit.
2. Candidate assessment
Assessment is what turns volume into a shortlist. The cost depends on the model: subscription platforms charge per month whether you hire or not, while pay-per-candidate pricing charges only for the people you actually assess. The saving is not the assessment fee itself but the interview hours it replaces: a short test before interview means you interview five people instead of fifteen.
3. Recruitment agency fees
Agencies typically charge a percentage of first-year salary, which for a mid-level role is the single largest direct cost most employers face. The fee buys sourcing and screening; it does not remove the need to assess the candidates yourself.
4. Internal recruitment costs
This is the time your own people spend: writing the advert, sifting CVs, interviewing, checking references and onboarding. Multiply hours by the hourly cost of the people involved. For a role with several interviewers and two rounds, it is often larger than the advertising and assessment costs combined.
5. Invisible costs to the business
While the role is open, the work is either not done or done by someone else at the expense of their own job. Overtime, slipped deadlines and lost sales all belong in the calculation, as does the manager's time spent covering.
Other recruitment costs to consider
Employee turnover
Every hire that leaves within the first year has to be repeated. Turnover is the multiplier on all the costs above, which is why a slightly longer, better-evidenced process usually costs less overall.
Time to hire
The longer the role is open, the larger the invisible cost. Time to hire falls when the first stage is quick and decisive: a short assessment that every applicant completes within days, followed by interviews for the strongest.
Making the wrong hire
A wrong hire costs the recruitment spend twice, plus salary and training for someone who did not work out, plus the damage to the team and customers in between. The Recruitment and Employment Confederation has estimated the total cost of a bad hire at a mid-management level at several times the salary. Whatever the exact multiple, it dwarfs every other line in the budget, which is why assessment before interview pays for itself quickly.
How to calculate your cost per hire
Add the direct costs (advertising, assessment, agency, background checks) to the internal costs (hours multiplied by hourly cost for everyone involved) and the vacancy cost (days open multiplied by the daily value of the role), then divide by the number of hires. Track it per vacancy and the figure will tell you where to act.
Most employers reduce the total in three places: shorter time to hire, fewer interview hours per hire and fewer wrong hires. Assessing candidates with a short, role-specific set of tests before interview addresses all three. On Test Candidates you build the assessment from our test library, pay per candidate result rather than a subscription, and your first results are free.
