How it is calculated
You add up every cost tied to recruiting: paid ads, tools, agency fees where they apply, and an estimate of the internal team time involved. Then you divide by the number of hires in the period.
The most common mistake
Most calculations only count direct spend (ads, agency) and forget internal time: recruiter hours, hiring manager hours, coordination. That time is not free, and it is often the largest line.
What it is actually for
The value is not the number itself, it is comparing it across channels: what each hire costs through LinkedIn Ads vs. referrals vs. an external agency. That is where it changes decisions.
Frequently Asked Questions
It varies a lot by industry and seniority. What is useful is not the market average but your own number per channel, tracked against itself over time.
No, that is a separate payroll cost, not an acquisition cost.
Not if it comes with worse hire quality or higher early turnover. Read it alongside retention.