The Difference Between Cost Per Applicant and Cost Per Hire

By Jessica Miller-Merrell 

Our industry has been gravitating toward metrics more and more in the last several years, and it’s served us well. They help executives understand what’s going on behind the scenes, allow us see what’s working and what’s not and give us a way to evaluate costs and benefits of our HR and recruiting practices. Cost per hire is one of the most widely accepted metrics, but there’s another measurement that can help us hone our recruiting strategies even further.

Cost per applicant is much more inclusive than its cousin, cost per hire. It evaluates how much our recruiting activities cost per applicant rather than per new hire. Simply put, it’s all the costs of internal and external recruiting divided by the number of total applicants you have for a position or during a certain period of time. While not used by companies as often as cost per hire, I would argue that it actually provides a clearer picture of whether or not your recruiting dollars are being used in the best way.

Where the costs come from

We know that it’s a misnomer that recruiting is basically free. Of course there are email blasts, social media and good old fashioned networking, but here in the real world, recruiting can be a significant expense for your organization. There are the traditional expenses, like your time, email marketing fees and attending recruiting events, but one of the most popular and effective ways of reaching candidates is a bit more complicated than just a flat fee.

Today, it’s all about the pay per click strategy. From job boards to job aggregator websites to search engines, companies are using cost per click to charge you for driving candidates to your job posting. These companies utilize networks, online ads and other media to promote your job listing. You’re paying each time one of those ads works and a potential candidate clicks on one. Essentially, these companies are making your media buys for you, which is much more efficient and cost effective than trying to do it yourself.

Pay per click is a smart way to use online media to reach candidates, but it is unknown territory in a lot of ways. The most significant is probably that the cost of each click can vary depending on how competitive the search phrase is, what traffic is like for the website you’re using and even the time of day. This can make it tougher to budget, plan and evaluate averages.

Why the strategy works

Even with the unknowns that come with utilizing a pay per click strategy, for many companies it’s the best possible strategy they can use. We are HR and recruiting experts, not marketing and media buying gurus. Pay per click takes a lot of the stress out of choosing where to advertise your job posting.

It also makes sense because it allows companies almost immediate feedback on what’s working and what’s not. You can see whether or not your ad is being seen, clicked and finally, whether or not people are making the buying decision to apply because of it. This allows you to quickly find out where things are going wrong and make tweaks accordingly.

Cost per applicant is an important tool in deciding where and how you’ll invest your recruiting budget, and pay per click is an important part of developing that strategy.

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Jessica Miller-Merrell, SPHR is a workplace and technology anthropologist specializing in HR and recruiting. She's the Chief Blogger and Founder of Blogging4Jobs and author of The HR Technology Field Guide. You can follow her on Twitter at @jmillermerell.