Believe it or not, most companies have no idea what a hire actually costs them.
They know what the job ad cost. Maybe the recruiter’s salary. But the hours managers spent in interviews, the software, the background checks, and the offer that fell through and sent everyone back to square one (yikes)? That usually doesn’t make it into the math.
And it’s hard to lower cost per hire when you don’t know your starting number. After 10 years of helping companies find and keep stronger talent, we see this all the time, and Mike Dixon, our President and COO, dug into it on The Fluent Conversation episode “Hire Smarter with AI.” So let’s start with the basics, then get into what you can actually do about it.
What Is Cost Per Hire?
Cost per hire is the total amount you spend to fill a role, from the first job post to the day your new hire accepts the offer.
Cost Per Hire (CPH) = (Internal Costs + External Costs) ÷ Number of Hires
- Internal costs: recruiter and HR salaries (or the time admins and office managers spend recruiting), interview time from hiring managers and the team, hiring software like your applicant tracking system, and referral bonuses.
- External costs: job ads and job board subscriptions (think Indeed), agency or search firm fees (often 20% to 30% or more of first-year salary), background checks and assessments, and travel, relocation, and signing bonuses.
You can run it for one role or over a set time period. For example, $60,000 spent on hiring last year ÷ 12 hires = a $5,000 average cost per hire. Running it across multiple jobs is easier, but it gives you a company or department average, not the cost of any one role.
Most companies underreport this number because they only count the obvious external costs. But your team’s time carries real weight. When your people are stuck recruiting, they’re doing $20-an-hour work instead of $200-an-hour work (we’ve even seen CEOs doing it). If you leave out the internal costs, your cost per hire will look a lot better than it really is, and recruiting costs add up fast.
What’s a Normal Cost Per Hire (CPH)?
Mike puts the U.S. average around $5,200, and it’s been climbing. SHRM reported nearly $4,700 in 2022 and $5,475 in 2025 for non-executive roles ($35,879 for executives).
But that average lumps everyone together. There are far more restaurant, retail, and entry-level hires every day than leadership hires, and all that high-volume hiring pulls the average down.
For management, specialized skills (i.e. engineering, manufacturing, sales), shortage skills (i.e. healthcare, specialized truck drivers), or other critical roles, $15,000 to $40,000+ per hire isn’t surprising. Executive searches can run even higher.
So if your cost per hire is above $5,000, don’t panic. Compare each role to what’s realistic for that kind of role, not to one national average, and put your bigger investments toward your top 10% to 15% most important roles.
6 Practical Ways to Lower Cost Per Hire
1. Move fast on good candidates (and cut the extra rounds)
When companies wait, Mike sees great candidates “gone in a week or two.” Then you’re paying for more ads, screening, and interviews to replace them. Top candidates move on the market’s timeline, not yours.
- Score candidates against the role, not each other. A simple scorecard tied to your must-haves lets you say yes to a strong candidate now, instead of waiting to “see who else applies” and losing the one that got away.
- Cut the interview rounds. Five rounds where three would do just gives your top pick more time to take another offer. Look at your last few hires, and if two rounds covered the same ground, combine them.
- Set a quicker timeline before the role opens. Decide who interviews (you need fewer people than you think), how fast feedback goes back, and who makes the final call. Here’s how.
And moving faster doesn’t mean lowering the bar. You can do both.
2. Define the win (and the pay) before you post the job
A fuzzy or overloaded job post brings in the wrong people (and weeds out good ones). Then you pay to sort through them, and sometimes you end up reposting the role twice. Do you want someone who’s been in sales for eight years, or someone who’s hit President’s Club three years in a row? We know who we’re picking.
- Hold a real intake meeting. Get decision-makers and HR/recruiters aligned on must-haves versus nice-to-haves before the role goes live (here’s an agenda).
- Ask for results, not years. Swap “8+ years required” or “Master’s degree required” for the outcomes you need and “experience preferred.” You’ll open up a much bigger pool of people who can do the job.
- Check your pay and benefits against today’s market. Below-market offers lead to late dropouts, turned-down offers, and early quits. Pew Research found 63% of workers who quit in 2021 said low pay was a reason. Here’s how to benchmark.
- Test the post on an outsider. If someone outside the team can’t explain the job back to you, candidates can’t either.
3. Treat every candidate like a future customer
A poor hiring experience shows up fast on sites like Reddit and Glassdoor. And as Mike puts it, “you’ll continue to pay more to recruit people if you don’t want to personalize the outreach and give them real feedback.” Today’s rejected candidate could be tomorrow’s customer, referral, or best hire.
- Set response times and stick to them. Acknowledge applications within 48 to 72 hours, and follow up after interviews within 2 to 3 business days.
- Close the loop with every no. A short, honest, compliant reason (and real feedback when you can give it) keeps the door open.
- Ask the ones who drop out why. If good candidates keep withdrawing at the same step or for the same reason, that’s your problem to fix.
- Look yourself up. Search your company name with “jobs” and “reviews,” and ask an AI tool what it’s like to work there. Here’s a 30-minute check.
More on why candidates ghost you and what a bad hiring experience really costs.
4. Hire for fit so you’re not hiring twice
The person who quits after 60 days doesn’t show up in your cost per hire, but now you’re paying to fill the same seat twice. A lot of early exits happen because the job wasn’t what they were told. What keeps people around is a healthy place to work, with honest expectations, leaders who do what they say, and integrity in how people get treated. Managers carry a lot of that (70% of the variance in engagement), and only 12% of U.S. employees say their company does onboarding well.
- Make the post match the real job. If a new hire says the job isn’t what was promised, fix the post or fix the job.
- Let candidates see the reality. Have them meet the team and hear the honest tradeoffs, so the wrong fits sort themselves out before day one.
- Have onboarding ready before the offer goes out. Name one point person who owns the first 90 days (here’s why it matters).
- Check in at 30, 60, and 90 days. Ask one simple question: is this job what you expected? You’ll catch problems while they’re still fixable.
More on the cost of a bad hire, cutting turnover without raising pay, and why culture is what you tolerate.
5. Don’t put all your eggs in one job board (and track what works)
Post every role on one board, and you keep paying for the same applicants, while a lot of great people never see it.
- Mix your channels. Think programmatic job ads (which move your budget toward the sites that are working), employee referrals, direct outreach (passive sourcing), industry groups, and local schools or trade programs.
- Go back to your silver medalists. Your last runner-up already knows your company and has been through interviews, so reaching out costs far less than starting from zero. (Another reason a good hiring experience matters!)
- Track where your hires actually come from. Note the channel and cost for every hire. If a board brings tons of applicants but almost no hires, move that money somewhere better (even if it’s pricier per applicant).
- Keep a warm pipeline. Stay in touch with strong people between openings so your next search doesn’t start cold (more on that here).
This is also where a good recruiting partner earns their keep, since they already have the channels, the tools, and a database of candidates to pull from.
6. Let AI do the heavy lifting (but not the final call)
AI saves your team a ton of time sorting applicants, scheduling interviews, sending follow-ups, and pulling feedback together. But as Mike says, “Humans still need to own the decision.”
That’s how we work at Hoops. Your CSM, recruiter, and sourcer stay in the decision room with your hiring team. We use AI to be more cost- and time-effective, like prioritizing which candidates to review first, but we never rule anyone out using AI alone. That also keeps you on the right side of the law, because “Humans are the compliance layer.”
- Start with your biggest time sink. For most teams, that’s screening, scheduling, and follow-up emails.
- Fix the job description first. AI can only screen against what you give it, so a vague post gets vague results.
- Keep a person on every yes or no, and make sure candidates can still easily reach a real human.
- Don’t rule people out for using AI. Plenty of candidates use it to help write resumes, and that’s okay. The goal is finding people who can do the job well.
And notice AI comes last on our list. If your process is a mess, AI just helps you make a mess faster. Here’s where AI helps most and where you still need people.
Lower Your Cost Per Hire Without Lowering the Bar
Yes, the goal is to lower your cost per hire, but in the right ways. Surface-level savings, like switching to the cheapest recruiting partner or cutting tools, usually cost more in the end through lower-quality hires, longer vacancies, missed revenue, and higher turnover. Saving a couple thousand dollars on a sales hire doesn’t help if the seat sits empty three extra months, or the person you land can’t sell.
Nobody wants to be the Temu of hiring. The real goal is the best quality hire for the lowest price possible. So look at cost per hire alongside how long it takes to fill the role and how good the hire turns out to be. Some roles are worth spending more on, and sometimes that means investing in the right partner.
Start With Your Real Number (Not Your Best Guess)
If you’ve never calculated your cost per hire, you’re not alone, and now you have a place to start. If you have, there’s a good chance you’re underreporting it. Either way, take an honest look at whether what you’re spending is getting you the people you need. If it isn’t, you may need to spend more in the right places, and that’s okay.
Here’s the short version: know your real number, fix the leaks, and spend less where it doesn’t matter so you can spend more where it counts. Or, as Mike sums it up, it all comes down to “a combination of discipline, process, and AI.”
If you’re looking for a better hiring experience at a lower cost, you can have a world where you achieve both. That’s what we do, and it’s exactly what our Hoops hiring service is designed for.
Let’s talk: Schedule a Free Discovery Call with Hoops
Watch the full episode of The Fluent Conversation, “Hire Smarter with AI,” which is out now: https://youtu.be/TYuPNbZzEhg
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