Summarized answer: There is no single cost-per-hire figure that is considered “good” for every business. A reasonable benchmark depends on factors such as the industry, job position, seniority, location, recruitment strategy, and internal hiring resources. Businesses should compare their cost per hire against relevant industry benchmarks and their own historical performance while also considering hiring speed, quality, and employee retention. The goal is not simply to spend less—it is to achieve a sustainable recruitment cost while consistently hiring qualified people.
Overview
Cost per hire helps businesses understand how much they spend to recruit each new employee.
- There is no universal benchmark: A reasonable cost per hire varies depending on the role, industry, company size, and hiring strategy.
- Calculate your actual cost: Add relevant internal and external recruitment costs and divide them by the number of hires during the same period.
- Compare like with like: Compare your results with similar roles, industries, locations, and company sizes.
- Lower is not always better: Cutting recruitment spending too aggressively can lead to fewer qualified candidates, slower hiring, or poor-quality hires.
- Track other metrics: Cost per hire should be reviewed alongside time to hire, quality of hire, retention, and recruitment ROI.
- Outsourcing can help: A recruitment partner can help businesses control hiring costs while providing access to sourcing and screening expertise.
- Hire Manila supports businesses: Hire Manila provides recruitment and HR support in Metro Manila and Cebu, helping businesses build more efficient hiring processes.
What is cost per hire?
Cost per hire is a recruitment metric that estimates how much a company spends to successfully hire one employee.
It can help businesses understand whether their recruitment process is efficient and where hiring expenses are coming from.
A company may spend money on job advertisements, recruitment software, agency fees, career events, background checks, interviews, and the time employees spend on recruitment activities.
Looking at these expenses individually can make recruitment costs seem manageable. However, when they are combined across multiple vacancies, the total can become significant.
Cost per hire brings those expenses together into one useful metric.
What is a good cost-per-hire benchmark?
So, what is a good cost-per-hire benchmark?
The answer depends on the business.
A company hiring entry-level employees in large volumes may have a very different benchmark from a company recruiting senior executives, highly specialised engineers, or technical professionals.
Instead of asking whether a specific peso amount is universally “good,” businesses should consider whether their cost per hire is:
- Sustainable: The business can maintain the recruitment process without excessive spending.
- Competitive: The company can attract qualified candidates in its target talent market.
- Efficient: Recruitment resources are being used effectively.
- Consistent: Costs are reasonably predictable from one hiring cycle to another.
- Linked to results: Recruitment spending produces suitable hires who stay and perform well.
A low cost per hire can look attractive on paper, but it does not necessarily indicate an effective recruitment strategy.
For example, reducing advertising spending might lower cost per hire while also reducing the number of qualified applicants. If vacancies remain open for longer, the business may ultimately lose more money through lost productivity.
What is the average cost per hire?
There is no single global average that applies to every company.
Recruitment costs can vary considerably based on factors such as:
- Job complexity
- Employee seniority
- Industry
- Location
- Talent availability
- Recruitment channels
- Use of external recruiters
- Company size
- Hiring volume
For this reason, businesses should be cautious about using a single published figure as their target.
A better approach is to establish an internal baseline and then compare it with relevant benchmarks for similar organisations and roles.
For businesses operating in the Philippines, for example, comparing the cost of hiring a local administrative employee with the cost of recruiting a highly specialised technical professional would not provide a particularly useful benchmark.
How do you calculate cost per hire?
The basic cost per hire formula is straightforward:
Cost per hire = Total recruitment costs ÷ Number of hires
For example, suppose a company spends ₱200,000 on recruitment activities over a quarter and makes 10 hires.
The calculation would be:
₱200,000 ÷ 10 = ₱20,000 cost per hire
The important part is determining which expenses should be included in the total recruitment cost.
What costs are included in cost per hire?
A comprehensive calculation can include both direct and indirect recruitment expenses.
Depending on how the business measures recruitment costs, these may include:
- Job advertising: Fees paid to job boards and recruitment platforms.
- Recruitment agency fees: Fees paid to external recruitment providers.
- Recruitment software: Applicant tracking systems and other hiring technology.
- Career events: Costs associated with job fairs and recruitment events.
- Background checks: Costs associated with screening candidates.
- Assessment costs: Fees for skills assessments and testing.
- Recruiter salaries: Relevant internal recruitment team costs.
- Interview costs: Internal resources spent interviewing candidates.
- Referral incentives: Employee referral bonuses and related programmes.
- Recruitment marketing: Employer branding and candidate attraction campaigns.
Companies should use a consistent methodology when calculating cost per hire. Otherwise, comparing one period with another can become misleading.
What is considered a high cost per hire?
A high cost per hire is not necessarily a specific peso amount.
It is better understood relative to the company’s circumstances.
For example, ₱50,000 might be expensive for one type of entry-level role but reasonable for a senior specialist position that requires extensive sourcing and assessment.
A cost per hire may be considered high when it is:
- Increasing without better hiring outcomes
- Significantly above relevant benchmarks
- Driven by inefficient recruitment processes
- Associated with long vacancy periods
- Producing poor-quality hires
- Causing excessive reliance on expensive recruitment channels
Businesses should look for trends rather than reacting to one unusually expensive hire.
If cost per hire increases consistently while quality of hire remains unchanged, that may indicate an opportunity to improve the recruitment process.
What is considered a low cost per hire?
A low cost per hire means the company is spending relatively little to recruit each employee.
However, low cost does not automatically mean efficient recruitment.
For example, a business may achieve a low cost per hire by relying entirely on free job boards and internal referrals. If the company struggles to attract qualified candidates, however, the apparent savings may not represent genuine efficiency.
A useful recruitment strategy aims for cost efficiency rather than simply the lowest possible cost.
The question should be:
Are we spending an appropriate amount to consistently attract, assess, and hire the right people?
What is a good cost per hire for a small business?
Small businesses often have fewer recruitment resources than larger organisations, so controlling hiring costs can be particularly important.
A reasonable recruitment cost should fit the company’s budget while still allowing it to reach qualified candidates.
Small businesses can improve cost efficiency by:
- Writing targeted job descriptions: Attract candidates who genuinely match the position.
- Using appropriate recruitment channels: Focus spending on platforms that produce qualified applicants.
- Building employee referrals: Encourage existing employees to recommend suitable candidates.
- Standardising screening: Use consistent criteria to reduce unnecessary interviews.
- Improving candidate communication: Reduce drop-offs caused by slow or unclear recruitment processes.
- Tracking recruitment data: Identify which channels and processes produce the best results.
For a small business, outsourcing selected recruitment activities can also provide access to professional sourcing and screening without requiring a full internal recruitment team.
Does cost per hire vary by industry?
Yes.
The average cost per hire by industry can vary substantially because different sectors have different talent requirements.
Industries that require specialised skills may have higher recruitment costs because qualified candidates are harder to find.
For example, a company recruiting experienced technology professionals may need specialised sourcing strategies, technical assessments, and competitive compensation packages.
Other sectors may recruit larger volumes of entry-level or operational employees, resulting in a different cost structure.
The most useful benchmark is therefore one that reflects the company’s actual hiring environment.
Does cost per hire vary by job position?
Absolutely.
A business should expect recruitment costs to vary between positions.
A junior administrative position may require a relatively simple recruitment process. A senior management role could require weeks of sourcing, multiple interviews, specialised assessments, reference checks, and potentially an executive recruitment firm.
This means businesses should consider tracking cost per hire by role or job family rather than relying exclusively on one company-wide figure.
Useful categories can include:
- Entry-level roles
- Professional roles
- Technical roles
- Management positions
- Executive positions
- High-volume operational roles
This creates a more meaningful picture of recruitment performance.
How does company size affect cost per hire?
Company size can influence recruitment costs in several ways.
Large organisations may benefit from established recruitment teams, employer branding, technology, and high hiring volumes.
They may also have higher overall recruitment expenses because they hire more employees.
Smaller companies may spend less overall but have higher costs per hire because recruitment resources are limited and hiring activities may be handled by managers who have other responsibilities.
Neither situation is automatically better.
The objective is to understand the company’s recruitment economics and identify opportunities to improve efficiency.
Why costly recruitment can become a business problem
Recruitment costs become particularly concerning when businesses are spending heavily without seeing better hiring results.
Consider a company that repeatedly pays for job advertisements, external recruiters, interviews, and assessments but continues to experience:
- Long vacancies
- Low applicant quality
- High candidate drop-off
- Poor hiring decisions
- High employee turnover
The problem may not simply be that recruitment is expensive.
The underlying issue may be an inefficient hiring process.
This is why businesses should look beyond cost per hire and examine the entire recruitment funnel.
How can businesses reduce cost per hire?
Reducing recruitment costs does not necessarily mean cutting every hiring expense.
Instead, businesses should identify where money is being wasted.
Improve job descriptions
Clear job descriptions can help attract candidates who understand the role and meet the basic requirements.
Focus on effective channels
Track where successful candidates come from and allocate more resources to channels that consistently produce qualified applicants.
Create a structured screening process
Standardised screening criteria can help recruiters and hiring managers spend less time reviewing unsuitable candidates.
Reduce unnecessary delays
Slow hiring processes can cause qualified candidates to accept other offers, forcing companies to restart recruitment.
Build a talent pipeline
Maintaining relationships with potential candidates can reduce the time and expense involved when a position becomes available.
Consider recruitment outsourcing
External recruitment support can provide additional sourcing and screening capacity without requiring the company to build a large internal recruitment team.
Why outsourcing recruitment can help control hiring costs
One reason recruitment becomes expensive is that internal teams may not have enough time or resources to manage every stage effectively.
Hiring managers may spend hours reviewing CVs, conducting interviews, communicating with candidates, and coordinating recruitment activities.
An external recruitment partner can take responsibility for selected parts of this process.
The goal is not simply to transfer recruitment costs to another company. The goal is to improve the efficiency of the overall hiring process.
A good recruitment partner can help businesses:
- Reach more qualified candidates
- Reduce time spent screening applications
- Improve recruitment workflows
- Reduce dependence on ineffective hiring channels
- Provide additional sourcing capacity
- Improve candidate communication
- Support hiring managers with recruitment expertise
Businesses should evaluate the overall recruitment outcome rather than focusing solely on the provider’s fee.
How Hire Manila can help reduce recruitment costs
For businesses concerned about expensive recruitment, improving the process can often have a greater impact than simply reducing individual recruitment expenses.
Hire Manila provides recruitment and HR support in Metro Manila and Cebu, helping businesses access professional recruitment expertise without necessarily having to build a large internal talent acquisition team.
Our recruitment support can help businesses with sourcing, candidate screening, and other parts of the hiring process, depending on their requirements.
This can be particularly useful for SMEs and growing businesses that need to recruit but do not have the resources to maintain a full recruitment department.
Instead of spending internal management time sorting through hundreds of applications, businesses can use professional recruitment support to focus their attention on the strongest candidates.
The result can be a more structured and efficient hiring process.
For businesses, the goal should not simply be “How can we spend less on recruitment?”
A better question is:
“How can we spend our recruitment budget more effectively?”
That shift can help businesses control costs while maintaining hiring quality.
With support available in Metro Manila and Cebu, Hire Manila can help businesses improve their recruitment processes and build a more efficient approach to hiring.
Which recruitment metrics should you track with cost per hire?
Cost per hire is useful, but it should not be evaluated in isolation.
Consider tracking it alongside:
- Time to hire: How long it takes to move a candidate through the hiring process.
- Time to fill: How long a position remains open.
- Quality of hire: How effectively new employees perform after joining.
- Offer acceptance rate: The percentage of offers accepted by candidates.
- Candidate retention: How long new hires remain with the company.
- Source of hire: Which recruitment channels produce successful employees.
- Recruitment ROI: Whether recruitment spending produces sufficient business value.
Together, these metrics provide a much clearer picture of recruitment effectiveness.
Frequently asked questions
What is a good cost-per-hire benchmark?
There is no universal good cost-per-hire benchmark. A reasonable target depends on factors such as industry, job position, seniority, location, company size, and recruitment strategy. Businesses should compare their cost with relevant benchmarks while considering hiring quality and retention.
What is the average cost per hire?
There is no single average cost per hire that applies to every business. Recruitment costs vary based on the role, industry, hiring volume, recruitment channels, and whether the company uses internal recruiters or external agencies.
How do you calculate cost per hire?
The basic formula is total recruitment costs divided by the number of hires during the same period. For example, ₱100,000 in recruitment expenses divided by five hires produces a cost per hire of ₱20,000.
What costs are included in cost per hire?
Cost per hire can include job advertising, recruitment agency fees, recruitment software, career events, background checks, assessments, internal recruiter costs, interview time, employee referral incentives, and recruitment marketing.
What is considered a high cost per hire?
A high cost per hire depends on the role and company’s circumstances. It may be a concern when costs are significantly above relevant benchmarks, rising without improved hiring outcomes, or associated with long vacancies and poor-quality hires.
What is considered a low cost per hire?
A low cost per hire means recruitment spending per successful hire is relatively low compared with an appropriate benchmark. However, low cost is only beneficial when the company can still attract and hire qualified employees effectively.
What is a good cost per hire for a small business?
A good cost per hire for a small business should fit its budget while allowing it to attract suitable candidates. Rather than using a universal number, small businesses should track their own costs and compare them with relevant roles, industries, and hiring channels.
Does cost per hire vary by industry?
Yes. Industries with specialised or highly competitive talent requirements may have higher recruitment costs than industries hiring larger volumes of readily available candidates. Industry-specific comparisons are therefore more useful than a universal benchmark.
Does cost per hire vary by job position?
Yes. Senior, specialised, technical, and executive roles often require more sourcing, screening, assessment, and interview time than entry-level positions. This can result in a higher cost per hire.
How does company size affect cost per hire?
Company size can affect cost per hire through recruitment volume, internal HR resources, employer brand strength, technology, and hiring processes. Smaller businesses may have fewer resources, while larger organisations may benefit from economies of scale.
Final thoughts
So, what is a good cost-per-hire benchmark?
There is no one number that works for every business.
The right benchmark depends on your industry, job positions, company size, location, hiring volume, and recruitment strategy. More importantly, cost per hire should be considered alongside the quality and speed of your hiring results.
If recruitment is becoming too expensive, the solution may not be to cut spending across the board. Instead, look for inefficiencies in sourcing, screening, interviewing, candidate communication, and hiring workflows.
Professional recruitment support can help businesses improve these processes while giving internal teams more time to focus on their core responsibilities.
Hire Manila provides recruitment and HR support in Metro Manila and Cebu, helping businesses build more efficient hiring processes and access professional recruitment expertise when they need it.
By measuring recruitment costs consistently, identifying inefficient processes, and choosing the right level of external support, businesses can work toward a healthier balance between cost, speed, and quality of hire.
