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Cost Per Hire Calculator

Calculate the true cost of hiring an employee beyond base salary. Includes employer taxes, health insurance, retirement match, recruiting costs, equipment, and software. Optionally see the ROI and a hire/don't-hire verdict.

Enter Values

$
0%100%

FICA: Social Security (6.2%) + Medicare (1.45%)

0%100%

SaaS licenses, email, Slack, etc.

$
$

Job ads, recruiter fees, interview costs

Optional: monthly revenue this hire will generate

Months to reach full productivity (default 3)

Result

Enter values above and click Calculate to see your result.

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Formula

Cost Per Hire = Salary + Employer Taxes + Benefits + Tools + Recruiting + Equipment

The cost per hire calculation goes far beyond base salary. Add employer FICA taxes (~7.65%), health insurance ($6K-$12K/yr), 401K match, software seats, one-time equipment, and recruiting costs. A $50K salary typically costs $62K-$75K+ in total. Optionally enter expected revenue to get a hiring decision with ROI and payback period.

Worked Example

Salary: $60K, FICA: 7.65%, Health: $600/mo, 401k: 3%, Equipment: $2K, Recruiting: $5K Step 1: Employer Tax = $4,590 Step 2: Health = $7,200/yr Step 3: 401k Match = $1,800 Step 4: Year 1 Total = $80,590 (1.34x salary) Step 5: Monthly burn = $6,116 With +$8K/mo revenue expected: ROI: +30.8%, Payback: 5 months Verdict: Yes - hire pays for themselves

What Is the True Cost Per Hire?

The Cost Per Hire, or CPH, represents the total financial investment a company makes to onboard a new employee. It's a critical metric for human resources and finance departments, as it extends far beyond the new hire's base annual salary.\n\nCalculating CPH involves aggregating all direct and indirect expenses associated with recruitment, hiring, and the initial setup of an employee. These often overlooked costs include employer-paid FICA taxes, health insurance contributions, 401K or retirement match percentages, the cost of software licenses or tool seats, one-time equipment purchases, and various recruiting or hiring agency fees.\n\nFor example, a $50,000 base salary can easily translate to a true annual cost of $62,000 to $75,000 or more when all these factors are considered. Understanding your actual cost per hire helps identify efficiencies in your recruitment process, budget more accurately for future growth, and evaluate the return on investment for each new team member.
  • Cost Per Hire is the total expenditure for onboarding a new employee.
  • It encompasses salary, employer taxes, benefits, tools, equipment, and recruiting fees.
  • Accurate CPH tracking reveals hidden expenses and informs budgeting decisions.
  • Optimizing CPH can significantly improve financial efficiency and hiring strategies.

Calculating your precise cost per hire is essential for strategic financial planning and effective human resource management. Use our calculator to uncover the full financial impact of your next hire and make informed business decisions.

You can also calculate changes using our Overtime Worth Calculator, Freelancer Rate Calculator, Cost of Bad Hire Calculator or Scope Creep Cost Calculator.

Frequently Asked Questions

How do you calculate cost per hire?

Cost per hire = base salary + employer taxes (FICA 7.65%) + health insurance + retirement match + software/tools + one-time costs (equipment, recruiting). The SHRM formula is: Cost Per Hire = (Internal Recruiting Costs + External Recruiting Costs) / Total Hires. Our calculator goes further by including the full ongoing employee cost.

What is the average cost per hire?

According to SHRM, the average cost per hire in the US is around $4,700 for recruiting alone. But the true total cost (salary + benefits + overhead) typically runs 1.25x to 1.4x the base salary annually. A $60K employee usually costs $75K-$84K per year.

What is FICA tax?

Federal Insurance Contributions Act - the employer pays 7.65% of salary (6.2% Social Security up to $168,600 in 2025, plus 1.45% Medicare with no cap). This matches what the employee also pays, making the total FICA burden 15.3%.

What recruitment costs are often forgotten?

Job board fees ($200-500 per posting), recruiter fees (15-25% of salary for agencies), interview time for your existing team, background checks ($30-100), onboarding materials, and the 2-3 months of reduced productivity during ramp-up.

How do I budget for recruitment?

A good recruitment budget is 10-20% of the first-year salary for the role. For a $60K hire, budget $6K-$12K for recruiting costs. This covers job ads, recruiter tools, background checks, and interview time.

When should I hire vs use a contractor?

Hire an employee when you need ongoing work (20+ hours/week for 6+ months). Use contractors for project-based work, specialized skills needed temporarily, or when testing a role before committing. Employees cost more in benefits but are cheaper long-term for core roles.

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Overtime Worth CalculatorFreelancer Rate CalculatorCost of Bad Hire CalculatorScope Creep Cost Calculator

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