ROI & Business Case · 14 min read

How to Reduce Cost-per-Hire with Automation and Assessments

The average cost-per-hire is €4,000-€7,000. With smart automation and assessments, you can halve that. Here's how.

Door Ingmar van Maurik · Founder & CEO, Making Moves


The cost-per-hire formula

Cost-per-hire is one of the most widely used metrics in recruitment, and simultaneously one of the most misleading. The standard formula is:

Cost-per-hire = (internal costs + external costs) / number of hires

The average cost-per-hire in the Netherlands is between €4,000 and €7,000 for standard positions. For specialized or senior positions, it can rise to €15,000-€25,000. And if you engage an external recruitment agency, you're easily looking at €10,000-€20,000 per placement.

But this formula doesn't tell the full story. It misses two crucial elements:

1. The quality of the hire — a cheap hire who leaves after 6 months is ultimately far more expensive

2. Hidden internal costs — the hours of hiring managers and team members that rarely get counted

In this article, we show how to structurally reduce cost-per-hire without sacrificing quality — and how with the right investments, you can actually make better hires at lower costs.

Where does the money go?

To reduce cost-per-hire, you first need to understand where the money goes. Costs break down into two categories:

External costs

  • Job board ads: €500-€2,000 per vacancy on Indeed, LinkedIn, or industry-specific boards. With multiple boards and sponsored listings, this quickly rises to €3,000-€5,000 per vacancy
  • Recruitment agency fees: 15-25% of annual salary. For a €60,000 position, that's €9,000-€15,000 — the largest external cost item
  • Assessment tools: €200-€500 per candidate with [generic providers](/artikelen/generic-assessments-dont-work). At 10-20 candidates per vacancy, that's €2,000-€10,000
  • Background checks: €50-€200 per candidate
  • Employer branding: career page, content creation, events
  • Internal costs (often underestimated)

  • Recruiter hours: average 30 hours per hire — of which 60-70% goes to screening
  • Hiring manager time: 10-15 hours per hire on briefings, interviews, and decision-making
  • Team interview time: 5-10 hours per hire — multiple team members are involved
  • Administration: contracts, onboarding documents, IT requests
  • Onboarding: 40-80 hours of guidance from colleagues in the first weeks
  • At an internal hourly rate of €75 for a recruiter and €100 for a hiring manager, internal costs already reach €4,000-€6,000 per hire — excluding external costs.

    The hidden money wasters

    Additionally, there are costs almost nobody counts:

  • Candidate drop-off: you invest in sourcing and screening, but 40-60% of candidates drop out due to [poor candidate experience](/artikelen/high-converting-job-pages) or slow processes
  • Re-hiring: when a hire fails, you start over. Re-hiring costs are rarely attributed to the original hire
  • Tooling overlap: the average recruitment department uses 4-7 separate tools that partially overlap
  • The five levers for lower cost-per-hire

    Lever 1: automate screening (biggest impact)

    Most recruiter time goes to screening: reading CVs, phone screening, conducting first interviews. This is repetitive, time-consuming, and inconsistent work.

    With AI, you automate the heavy lifting:

  • [AI CV screening](/artikelen/ai-replacing-cv-screening): automatic parsing, skills matching, and ranking. Saves 10-15 hours per vacancy on manual CV reading
  • Pre-assessments: candidates are automatically tested on relevant competencies. 60-70% are automatically filtered, so recruiters only see the best candidates
  • [AI pre-interviews](/artikelen/ai-pre-interviews-future): replaces phone screening calls. Saves 15-25 hours per vacancy on phone calls
  • Total savings: 60-80% of screening time, which translates to 15-25 hours per vacancy. At an internal hourly rate of €75, that's €1,125-€1,875 per vacancy.

    Lever 2: better assessments = fewer bad hires

    This is the lever most often overlooked. Every bad hire costs €50,000-€150,000. If you improve hire quality, you save multiples of the assessment investment.

    Calculation example at 100 hires per year:

    ScenarioFailure rateBad hiresCost of bad hires

    |----------|-------------|-----------|-------------------|

    Without assessments20%20€2,000,000 With generic assessments15%15€1,500,000 With [custom assessments](/artikelen/valid-reliable-assessment)8-10%8-10€800,000-€1,000,000

    The difference between generic assessments and custom assessments is €500,000-€700,000 per year — a return that justifies any investment in your own system.

    Lever 3: increase job page conversion

    An average job page has a conversion rate of 8-12% (visitors who actually apply). With an optimized job page, you can increase that to 30-50%.

    What does this mean for cost-per-hire?

  • You need less job board spend to generate the same number of applicants
  • At a spend of €2,000 per vacancy and a doubling of conversion, you effectively save €1,000 per vacancy
  • Bonus: a better candidate experience leads to less drop-off later in the process
  • Lever 4: reduce dependency on recruitment agencies

    Recruitment agencies are the most expensive way to hire. At a fee of 20% on a €60,000 salary, you pay €12,000 per placement. If 30% of your hires go through agencies (at 100 hires = 30 placements), that's €360,000 per year.

    With your own hiring system, you can drastically reduce that dependency:

  • Better direct sourcing through automated screening and assessments
  • Higher conversion on your own job pages
  • Faster processes so candidates don't drop out
  • Better employer branding through a professional candidate experience
  • A reduction of agency dependency from 30% to 10% saves: 20 placements x €12,000 = €240,000 per year.

    Lever 5: own system vs. SaaS stack

    The average recruitment department uses a fragmented stack:

    ToolMonthly cost

    |------|-------------|

    ATS (Greenhouse, Lever, etc.)€500-€2,000 Assessment tool (TestGorilla, Harver)€200-€500 Scheduling tool€100-€200 CRM/sourcing tool€200-€500 Video interview tool€100-€300 Analytics/reporting€100-€300 Total€1,200-€3,800/month

    That's €14,400-€45,600 per year on separate tools that don't work together optimally. With your own integrated system:

  • One-time investment instead of ongoing licenses
  • Better integration — data flows seamlessly between components
  • No vendor lock-in — you [own your data](/artikelen/own-your-hiring-data)
  • Break-even typically at 12-18 months
  • The full picture: halving cost-per-hire

    Let's add everything up for a company making 100 hires per year:

    LeverAnnual savings

    |-------|--------------|

    Screening automation€112,500-€187,500 Better assessments (fewer bad hires)€500,000-€700,000 Higher job page conversion€50,000-€100,000 Fewer recruitment agencies€120,000-€240,000 Own system vs. SaaS stack€14,400-€45,600 Total€796,900-€1,273,100

    Even with conservative calculations, you can reduce cost-per-hire from €5,000-€7,000 to €2,000-€3,000 — a halving that directly translates to the bottom line.

    Implementation path: where to start?

    You don't have to do everything at once. The most effective path:

    Phase 1: Quick wins (month 1-2)

  • Optimize your [job pages](/artikelen/high-converting-job-pages) for higher conversion
  • Implement basic pre-assessments to automate screening
  • Analyze your current tooling stack for overlap and costs
  • Phase 2: AI screening (month 2-4)

  • Implement [AI CV screening](/artikelen/ai-replacing-cv-screening) for automatic ranking
  • Introduce [AI pre-interviews](/artikelen/ai-pre-interviews-future) as a replacement for phone screening
  • Start collecting data for [continuous validation](/artikelen/continuous-validation-hiring)
  • Phase 3: Own system (month 4-6)

  • Migrate to an [integrated hiring platform](/ai-hiring-system)
  • Build company-specific assessment models
  • Reduce dependency on external tools and agencies
  • Key takeaways

    Reducing cost-per-hire isn't about cutting quality. It's about smarter investing in your recruitment process:

  • Automate the repetitive work that costs recruiters hours
  • Improve hire quality with [validated assessments](/artikelen/valid-reliable-assessment) — every avoided bad hire saves €50,000-€150,000
  • Increase conversion on your job pages to get more from your sourcing budget
  • Reduce agency dependency through a better in-house recruitment process
  • Consolidate your tooling into one integrated system
  • The companies that most effectively reduce their cost-per-hire aren't the ones cutting corners. They're the ones investing in a system that pays for itself.

    Want to know what savings opportunities exist for your organization? Schedule a conversation and we'll calculate it for you.


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