What Is Cost Per Hire?
Cost per hire is a recruiting metric that measures the total expense incurred to fill a single position — including internal costs (recruiter time, tools) and external costs (agencies, job boards, sourcing).
Cost per hire is a recruiting metric that measures the total expense incurred to fill a single position — including internal costs (recruiter time, tools) and external costs (agencies, job boards, sourcing). It's the most fundamental metric for evaluating recruiting efficiency and is defined by SHRM and ANSI as a standard HR metric.
How to Calculate Cost Per Hire
Cost Per Hire = (Internal Costs + External Costs) ÷ Number of Hires
Internal costs include: recruiter salary (prorated), hiring manager interview time, ATS software, employee referral bonuses, and onboarding expenses. External costs include: job board postings, recruiting agency fees, background checks, sourcing tools, and advertising.
2026 Cost-Per-Hire Benchmarks
| Hiring Method | Typical Cost Per Hire | Time to Fill |
|---|---|---|
| Recruiting agency (contingency) | $15,000–$25,000 | 30–60 days |
| Internal recruiter | $8,000–$12,000 | 36–45 days |
| Job boards (Indeed, LinkedIn) | $3,000–$7,000 | 30–50 days |
| AI-powered (Shortlist) | $500–$2,000 | 2–7 days |
Why Cost Per Hire Matters
For sales roles specifically, high cost per hire compounds with high turnover. SDR annual turnover averages 35%. If your cost per hire is $15K through an agency and you're replacing 3 SDRs per year, that's $45K in recurring recruiting costs — before accounting for lost productivity during ramp.
How to Reduce Cost Per Hire
The biggest lever is eliminating agency fees. Contingency agencies charge 15–25% of first-year salary — $12K–$20K per SDR hire. Switching to AI-powered sourcing through Shortlist cuts that to a fraction while delivering candidates faster. Post your first role free →
Frequently Asked Questions
What is the average cost per hire?
The SHRM benchmark is ~$4,700 across all roles. For sales roles specifically, cost per hire ranges from $8,000–$25,000 depending on whether you use agencies, internal recruiters, or AI-powered tools.
How do you calculate cost per hire?
Cost Per Hire = (Internal Costs + External Costs) ÷ Number of Hires. Internal costs include recruiter time and tools. External costs include agencies, job boards, and sourcing.
What is a good cost per hire for SDRs?
Under $5,000 is excellent. $5K–$10K is typical with internal recruiting. Over $15K (agencies) is expensive and can be reduced significantly with AI-powered sourcing.
How can I reduce cost per hire?
The biggest lever is eliminating agency fees (15–25% of salary). AI-powered platforms, employee referral programs, and strong employer branding all reduce cost per hire significantly.