What Is Cost Per Hire?

Cost per hire is total recruiting cost (internal + external) divided by the number of hires in a period: (internal costs + external costs) ÷ hires. SHRM put the average cost per hire at nearly $4,700 (SHRM, April 2022), but the figure most teams compute is wrong in one systematic way - it omits interviewer time, which for technical roles is often the single largest cost. 20 hours of engineer interviews at $80/hour is $1,600 per hire that never appears in the recruiting budget. The Cognitive removes interviewer hours from the screening stage, which is usually the internal cost that dominates this calculation.

What goes into the cost-per-hire formula?

External: job boards, agency fees, sourcing tools, assessments, background checks, employer-brand spend.
Internal: recruiter salaries (prorated), referral bonuses, and - almost always missed - hiring team interview hours.
Divide by hires in the same period; segment by role family, because a $2,000 support hire and a $15,000 engineering hire average into a meaningless number.

What levers actually reduce cost per hire?

Replace manual screens: an hour or more of staff time per screen becomes an AI interview on plans from $99/month - at 100 screens a month, that is 100+ staff hours back.
Cut agency dependence with in-house AI sourcing (credits from $99/month vs 20-25% placement fees).
Shorten time-to-fill: every vacant week has a productivity cost that dwarfs recruiting line items.
Reduce mis-hires: evidence-based selection beats resume filters, and one avoided mis-hire pays for a year of tooling.

Frequently Asked Questions

What is a good cost per hire?

It varies by role and market: hourly roles cost far less to fill than professional ones, and executive search costs most, so compare like with like. SHRM's often-quoted average is nearly $4,700 (2022). Trend matters more than the absolute number - compute it consistently (including interview hours) and drive it down without dropping quality of hire.

How do AI interviews change cost per hire?

They attack the cost most teams leave out: interviewer time. A first-round screen run by AI takes no recruiter or engineer hours, and the shortlist arrives with evidence attached. The ROI calculator on this site computes the effect for your volume.