Best practices for reducing your cost per hire

Hiring the right people is essential but doing it cost-effectively is often overlooked. While most companies track time-to-hire and candidate quality, few pay close attention to the cost per hire, a metric that quietly eats into budgets with every job post, recruiter fee, and delayed decision.

Understanding your cost per hire isn’t just about saving money; it’s about making smarter, more strategic hiring decisions. Whether you're scaling quickly or hiring selectively, reducing this cost can free up budget for growth, improve recruitment ROI, and help you attract better talent.

In this article, we’ll break down the key contributors to high cost per hire, explore common pricing traps, and share proven best practices to reduce hiring costs without compromising candidate quality.

Common questions about reducing cost per hire

Before you can reduce your cost per hire, you need to understand what’s driving it up. Many hiring teams ask:

1. Why is our cost per hire so high?
   Is it the tools we’re using, the time it takes to hire, or something else?
2. What are we actually paying for during recruitment?
   From job board fees to internal hours spent screening candidates, the costs add up quickly.
3. Are we overspending on job boards or agencies?
   Could we achieve the same results with more affordable or in-house solutions?
4. How can we reduce hiring costs without hurting quality?
   Is it possible to cut costs and still attract top talent?

To reduce your cost per hire, you first need to understand what you're paying for. A typical cost per hire includes:

• Job advertising (e.g., LinkedIn, Indeed, niche boards)
• Recruiter fees (internal or external)
• Hiring software (ATS, CRM, screening tools)
• Internal time spent by HR, hiring managers, and interviewers

But that’s just the surface. Hidden costs, like slow hiring processes, poor candidate experience, and bad hires, can inflate your spend dramatically. A bad hire alone can cost up to $17,000, according to a report by the U.S. Department of Labour.

Industry benchmarks vary, but according to SHRM, the average cost per hire is around $4,700, while Workable estimates it can range from $3,000 to $5,000 depending on company size and role complexity. For executive roles or highly specialised positions, costs can exceed $10,000 per hire.

The good news? There are pricing levers you can optimise:

• Switch from paid job boards to free or organic channels
• Automate screening to reduce manual hours
• Use referral programs to lower sourcing costs
• Improve employer branding to attract candidates without paid ads

By identifying where your money is going, and where it doesn’t need to, you can start making smarter, more cost-effective hiring decisions.

Best practices to reduce cost per hire

Reducing your cost per hire doesn’t mean cutting corners; it means being smarter with your resources. Here are five proven strategies that can help you hire more efficiently without sacrificing candidate quality:

• Use free or low-cost job boards
  Paid job boards can be effective, but they’re not always necessary. Platforms like LinkedIn, AngelList, and industry-specific forums often offer free or low-cost posting options.
  
  For example, Zapier, a remote-first company, avoids traditional paid job boards and instead uses platforms like We Work Remotely and organic LinkedIn posts. This shift helped them maintain a steady flow of qualified applicants while saving over $30,000 annually on job board fees.
• Leverage employee referrals
  Referral programs are one of the most cost-effective hiring channels. They typically yield higher-quality candidates who stay longer.
  
  Deloitte implemented a structured referral program that led to a 25% reduction in hiring costs. Referred candidates were also 40% more likely to stay beyond three years, improving retention and reducing turnover-related expenses.
• Improve employer branding
  A strong employer brand attracts candidates organically, reducing reliance on paid ads. This includes having a compelling careers page, showcasing team culture on social media, and sharing employee testimonials.
  
  HubSpot invested in employer branding through its widely shared “Culture Code” video and transparent Glassdoor presence. This helped them attract top talent organically, saving over $10,000 per campaign by reducing reliance on paid ads.
• Automate screening
  Manual resume reviews and phone screens eat up hours. Tools like Workable, Greenhouse, or Breezy HR offer automated screening features, including pre-screening questions and AI-powered resume filters.
  
  Unilever adopted HireVue, an AI-powered video interview platform, to streamline early-stage screening. This reduced screening time by 75% and lowered cost per hire by $6,000 for graduate roles, resulting in $1M+ in annual savings globally.
• Repurpose content marketing for recruitment
  Your marketing content can double as recruitment material. Blog posts, videos, and social media updates that highlight company culture, team achievements, or behind-the-scenes stories can attract passive candidates.
  
  Canva uses blog posts and social media to showcase its team culture. Their “Life at Canva” content increased inbound applications by 60%, allowing them to cut back on paid recruitment ads and save over $50,000 annually.

By combining these strategies, companies can significantly reduce their cost per hire while improving candidate quality and experience. The key is to treat recruitment like marketing: targeted, authentic, and optimised for ROI.

Summary table: Cost-saving best practices to reduce cost per hire

Reducing cost per hire: Buying process and pricing guidance 

Reducing cost per hire isn’t just about cutting expenses; it’s about knowing where to spend strategically. Here’s how to evaluate your options:

• Free vs. paid job boards
  Free platforms like LinkedIn organic posts, AngelList, and We Work Remotely offer solid reach for zero cost. Paid boards like Indeed, Monster, or LinkedIn Sponsored Jobs can be effective but may cost $300-$700 per post, depending on duration and targeting.

• Agencies vs. in-house hiring
  Recruitment agencies typically charge 15-25% of the candidate’s first-year salary. In-house hiring, while slower, can be more cost-effective if supported by automation and strong branding. Agencies may be worth the investment for executive or hard-to-fill roles.

• Referral incentives
  Referral bonuses range from $500 to $2,000. While this is an upfront cost, referred candidates often stay longer and require less screening—saving thousands in the long run.

• Employer brand assets
  Creating a careers page, culture video, and employee testimonials can cost $5,000-$15,000, but these assets drive organic applications and reduce reliance on paid ads over time.

Cost per hire: Strategy pricing comparison table

Debunking common myths about cost per hire

When it comes to reducing cost per hire, scepticism is natural. Here’s how to address common concerns:

• “Free tools don’t get enough reach.”
  While paid platforms offer targeting, LinkedIn organic posts and niche job boards like We Work Remotely have proven effective for companies like Zapier, which hires globally without relying on paid ads.
• “Referral programs don’t scale.”
  Deloitte scaled its referral program across global offices, achieving a 25% reduction in hiring costs and improved retention. Structured incentives and internal promotion make scaling possible.
• “We don’t have time to build content.”
  Canva repurposed existing marketing content to attract talent, saving $50,000+ annually. Even short videos or blog posts can boost employer brand without a full-scale campaign.
• “Cheap hiring = poor candidates.”
  Cost-effective hiring doesn’t mean low quality. Unilever used AI screening to reduce costs while improving candidate experience and quality, saving $6,000 per hire.

Making smarter hiring decisions without overspending

Hiring the right talent doesn’t have to come at a high cost. By understanding the true drivers behind your cost per hire and applying proven strategies, you can significantly reduce recruitment spend while improving candidate quality and retention.

But knowing where to start can be overwhelming. As a global workforce solutions provider, Airswift specialises in helping companies streamline their hiring processes, reduce time-to-fill, and optimise recruitment costs, especially for technical, engineering, and specialist roles.