A step-by-step way to work out what a new hire really costs, using your own numbers instead of rules of thumb.
Knowing the real cost of a hire helps with budgeting, deciding between hiring and offering more hours to current staff, pricing services and understanding what turnover costs you. The number is specific to your business, so it is worth calculating with your own data instead of relying on general figures.
EZTime digital HR forms let you send, sign and file employee documents online.
Use current rates from your payroll provider, insurer and the relevant agencies, since tax rates and wage bases change.
Here is a fictional example for a part-time hourly role, using made-up numbers to show the method only:
| Item | How estimated | Amount |
|---|---|---|
| Job ads | Two posts | $300 |
| Recruiting time | 10 manager hours x $30 | $300 |
| Background check | One check | $50 |
| Uniform and equipment | Shirt, apron, name tag | $80 |
| Training hours (new hire) | 24 hours x $17 | $408 |
| Training hours (trainer) | 12 hours x $22 | $264 |
| Wages | 25 hours x 50 weeks x $17 | $21,250 |
| Employer payroll taxes and workers’ comp | Estimate from your provider, e.g. 10% of wages | $2,125 |
| Software | 12 months x $4 | $48 |
| Total first-year cost | $24,825 |
In this example, about 93% of the cost is ongoing wages and taxes, and about 6% is one-time hiring and training. Your numbers will be different, but the method stays the same. Our guide on how to calculate labor cost covers the ongoing part in more detail.
Every time someone leaves, you pay the one-time costs again, and you also lose productivity while the role is empty and while the new hire learns. Other employees may work overtime to cover the gap. That is why reducing early turnover can save more than cutting hiring spend. See our guide on how to reduce employee turnover.
Before opening a new role, check whether existing staff want more hours. Compare:
| Option | Main costs | Watch out for |
|---|---|---|
| Hire a new employee | One-time hiring and training, ongoing wages and benefits | Turnover in the first months |
| Offer more hours to part-time staff | Wages, possible changes in benefit eligibility | Availability and fatigue |
| Use overtime | Premium pay | Burnout, errors and compliance risk |
A quick look at current hours and availability can make the decision clear.
Seasonal hiring follows the same method, but the one-time costs are spread over fewer weeks of work, so the cost per hour worked is higher. Rehiring people who worked the previous season can cut recruiting and training time sharply. Keep contact details and notes on strong seasonal workers, with their permission, and invite them back early.
Once you know the cost of one hire, you can plan for the year. Estimate how many people you expect to hire, including replacements for those who leave, and multiply by your one-time cost per hire. Add the ongoing cost of any new roles. Review the plan each quarter against actual hires and turnover. If replacement hiring is a large share of the budget, that is a strong signal to invest in retention.
EZTime cuts admin time around new hires: add an employee, assign them to the schedule, and they clock in from the mobile app, a kiosk or NFC from day one. E-signatures and digital forms help with onboarding paperwork, and accurate hours keep the first paycheck right. Plans start at $2 per employee per month, so the software cost per hire stays predictable.
One-time costs such as advertising, recruiting time, checks, equipment and training, plus ongoing costs such as wages, overtime, payroll taxes, workers’ compensation, benefits and tools.
Ask your payroll provider for current rates, or use official rates from the IRS and your state. They include the employer share of Social Security and Medicare and unemployment taxes.
Published averages vary widely by industry and role. Your own calculation, using the method above, is more useful for decisions.
Yes. Time spent interviewing and training has a real cost, even if it does not appear as a separate bill.
Clear job ads, structured interviews, referrals, prepared onboarding and lower early turnover all help.
It is useful to estimate it separately. While a role is empty, others may work overtime, service may slow and sales may be lost. These costs are real even though they do not appear on an invoice.
EZTime tags hours by job, client and role and shows real-time labor costing on the schedule, so estimates can be checked against actual hours. See current plans and what each one includes on the pricing page.