Cost per hire is defined as an organization’s talent achievement strategy is calculated as the amount of monetary investment it takes to attract and recruit new employees. These financial investments include relocation costs, advertising organization fees, travel cost of applicants and staff, employee referrals, and recruiter pay and benefits upon the total no. of persons hired in a time period. ( Few Companies only include Channel MiX Cost Like Vendor, Referral etc).

Cost Per Hire Calculation Formula

Cost-per-hire or CPH is the most frequently encountered word used in the recruiting arena. It can also apply both to internal promotions ie within the organization or transfers, as well as new hires recruited from outside the organization.


For example, if XYZ Company paid an advertising fee to put an advertisement for the opening in a daily newspaper, highlighting this fee. As an example, the company paid $500 for advertising, $12 in employee referrals, $1000 in relocation expenses and $25 in internal recruiting costs.

The sum for this would be $1537. This is the total hiring cost connected with the hiring of a new employee. Let us divide the total hiring costs by the number of employees hired in a given period. In our example, if the company hired 3 employees, then $1537 divided by 3 equals a cost per hire of $512.34.

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