Where should I cut hiring costs?

Not from advertising, which is 500 of 4,094. Cut interview rounds — each round of three panellists costs about 170 in salaried time and adds delay that loses candidates. Then improve selection, because a failed hire costs nearly seven times a successful one.

Is an agency ever worth 20%?

For genuinely scarce skills, or when the role has been open long enough that the vacancy is costing more than the fee. Compare the fee against the cost of the role staying empty, not against your internal hiring cost — those are different questions.

Cost per Hire Calculator

Calculate the cost of recruiting new employees.

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Recruitment Cost Guide

Why know recruitment costs?

Knowing the actual cost of hiring allows for more effective HR budget planning and optimization of recruitment processes. Many companies are unaware of the full costs, which include not only direct costs but also the time spent by HR staff and managers on candidate selection.

Detailed cost breakdown

Job postings - job boards, social media, print ads
Recruiter fees - commissions for finding candidates
Agencies - costs of external recruitment firms
Internal costs - time spent by own employees
Other - tests, job fairs, recruitment materials

How to reduce costs?

Invest in employer branding to attract better candidates. Use employee referral programs which have the lowest cost. Optimize the recruitment process to reduce handling time. Consider automating the first stages of selection. Internal recruitment is cheaper but requires more time. Measure and analyze costs regularly to identify areas for optimization.

Recruiting costs 4,094. Getting it wrong costs 27,688

Hiring budgets track advertising and agency fees, which is the cheap part. The expensive part is a hire who leaves before they have repaid their ramp-up — and that cost is dominated by salary already paid for output not yet delivered, not by anything a recruitment team spends.

How it works

Totals the direct costs of filling a role: advertising, recruiter hours, interview panel time, onboarding.
Prices interview time at fully loaded cost, since a panel is several salaried people at once.
Compares a completed hire against one that fails early, which is where the real money is.

cost per hire = advertising
              + recruiter hours × loaded rate
              + (rounds × panellists × hours) × loaded rate
              + onboarding and equipment
              + agency fee, if used

failed hire = cost per hire × 2 + unrecovered ramp-up

Worked example

A 60,000 role: five interview rounds with three panellists each, twenty recruiter hours, and a three-month ramp to full productivity.

advertising 500
recruiter: 20 h × 37.50 = 750
panel: 5 × 3 × 1.5 h × 37.50 = 844
onboarding and equipment: 2,000
internal total: 4,094 — or 16,094 with a 20% agency fee

4,094 to hire, which is 6.8% of first-year salary. But if that person leaves at six months, the three months of ramp never repaid costs 19,500 on its own, and hiring again costs another 4,094 — a total of 27,688, or 6.8 times a clean hire.

Reading the result

Ramp-up dominates everything else. Three months of salary paid for partial output is 19,500 against 4,094 of recruitment spend — which means selection quality is worth far more attention than recruitment efficiency.
Panel time is the hidden line. Five rounds of three people is 22.5 person-hours of salaried time, and it is charged to no budget, which is why interview loops expand without anyone approving the cost.
An agency fee at 20% is four times the entire internal cost of hiring. That is the honest comparison to make before signing, and it is also the argument for funding referrals properly, since a referred hire runs closer to 2,400 all-in.
This counts only the employer's side. The candidate is spending too — roughly 4,500 in unpaid time and expenses to secure one offer — which is worth remembering when designing a process with five rounds in it.

Common questions

Where should I cut hiring costs?: Not from advertising, which is 500 of 4,094. Cut interview rounds — each round of three panellists costs about 170 in salaried time and adds delay that loses candidates. Then improve selection, because a failed hire costs nearly seven times a successful one.
Is an agency ever worth 20%?: For genuinely scarce skills, or when the role has been open long enough that the vacancy is costing more than the fee. Compare the fee against the cost of the role staying empty, not against your internal hiring cost — those are different questions.