How to calculate hiring costs: formula, breakdown and worked example

1Worked example: how much did one position actually cost?

All figures below are illustrative assumptions, not market rates. Actual amounts depend on the company's pay structure, how hard the role is to fill, and the recruiting method.

Assumptions:

• Role: mid-level administrative staff at a monthly salary of NT$40,000
• HR hourly cost (based on a monthly salary of NT$45,000 and about 176 working hours per month): about NT$256/hour
• Manager's hourly rate (based on a monthly salary of NT$70,000): about NT$398/hour
• Recruiting method: post on job sites and hire yourself

If only 1 person is hired in this round, the cost per hire is about NT$19,676; if the same posting results in 2 hires, the cost per hire drops to about NT$9,838. This is why hiring several people for the same role at once usually costs less per hire than filling seats one at a time.

2How do you convert internal time into cost?

The formula: hours spent × that person's hourly rate. You can roughly estimate the hourly rate as “monthly salary ÷ average monthly working hours” (for example, 22 working days a month at 8 hours a day, about 176 hours). There's no need for decimal-point precision; the point is to turn “invisible time” into a number so it can sit on the same sheet as external costs for comparison.

The hours to count usually include:

• HR résumé screening and phone pre-screening
• Scheduling interviews, contacting candidates
• Actual interview time for interviewers (HR + manager, sometimes senior leadership)
• Administrative work between offer and start date (contracts, labor and health insurance enrollment changes)
• Training and onboarding time after the hire starts (until the newcomer is productive, whoever trains them gets less of their own work done)

3How do you estimate the cost of an unfilled role?

There's no official, standard formula for the cost of a vacancy, but a common way to estimate it is: how much value the role would create (or how much outsourcing cost it would save) per day or month if filled, multiplied by the number of days it stays empty. For example, a sales role left open for a month means losing the revenue contribution you expected that month; for administrative or technical vacancies, the estimate is usually based on the extra cost of temps or outsourcing to cover the work.

Taiwan has no public statistic telling you "how much an average vacancy costs per day," because it varies too much by role to apply across the board. But there is public data on how long hiring takes: according to the "2026 HR FBI Report" from 104 Job Bank (a Taiwanese job site), published 2026-08-12, companies take an average of 44.9 days to hire one employee, 77 days on average for managerial roles, and 40 days for general staff; electronics and IT take the longest, averaging 61 days. Multiply that number of days by the "daily output value or cover cost" mentioned above, and you have an estimate of the vacancy cost for your role.

4What does a bad hire cost?

The cost of a bad hire isn't just recruiting again; it stacks up several layers of loss. Common items include:

1. The full cost of re-hiring: the same as running the entire cost table above all over again
2. Training investment goes to waste: the time trainers and colleagues spent can't be recovered after the person leaves
3. The vacancy left behind: between that person leaving and a replacement arriving, the role sits empty again
4. Team morale and handover costs: Other colleagues have to cover the work, and the risk of handover mistakes rises
5. Possible severance or layoff-related costs: depend on the case and the employment contract

The same 104 report also shows that in 2025, only 62.2% of new hires were still in the job six months later, down 4 percentage points from 2024; general services were even lower, at 56.6%. In Taiwan, then, "hiring the wrong person" or "not keeping people" is not rare. It is a routine risk companies must factor in when estimating hiring costs, not an extreme case.

5How can you lower hiring costs?

The key to lowering hiring costs isn't finding the cheapest channel but reducing how often you have to start over, because redoing the work (wrong hires, roles left unfilled, candidates dropping out before day one) is what really drives costs up. A few approaches:

• Spell out the role spec first: state the pay band, hard requirements, and job content clearly up front, cutting the time lost to re-screening because conditions weren't aligned
• Hand off the front end of screening: if HR's time is mostly tied up screening résumés and scheduling interviews, recruitment outsourcing or temporary staffing can turn that time cost into a one-time or fixed external fee, instead of something that keeps eating into internal hours
• Take a longer view of retention: since 104's data shows a six-month retention rate of only 62.2%, spending a little more time confirming motivation and expectations during hiring is cheaper than refilling the role later
• Batch processing for the same role: if you need several people for the same role, holding interviews together and sending notices in batches lowers the cost per hire (see our other article, "How to do mass hiring")

The cost structures and best-fit scenarios for each hiring approach (hiring yourself / outsourced recruitment / temporary staffing) are broken down in "How to Choose Recruitment Outsourcing for Entry- and Mid-Level Roles," so we won't repeat the numbers here. Details on headhunting fee models are in "How Are Headhunter Fees Calculated?", and a full breakdown of the statutory employer costs of staffing (labor insurance, health insurance, the 6% pension contribution, etc.) is in "How Are Staffing Costs Calculated?". In short, statutory employer costs come to about 18%–19% of salary. That is a fixed formula, not a market rate; see that article for the detailed rates and legal basis.

Taking Step1ne as an example, permanent recruitment outsourcing is success-based: fees apply only when the candidate starts, and in principle there's no charge if they don't. On average, fees start at about 1.5 months' salary (this is Step1ne's own fee standard, not a market rate; the actual rate depends on role difficulty and the engagement contract). This article does not compare other providers' fees.

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