Cost per hire adds up everything spent to fill your roles, including job advertising, agency fees, recruiting tools, referral bonuses and the time your own team spends, then divides it by the number of hires made. It gives you a single figure for what a hire actually costs your organisation, which is useful for budgeting and for spotting when a particular channel or role is quietly expensive.
Like most single numbers, it is easy to misread on its own. A low cost per hire looks good until you notice those hires are not working out, in which case the real cost, counting the re-hire and the lost productivity, is far higher than the headline. The cheapest hire is expensive if it leaves in six months.
That is why cost per hire is most useful watched over time and read alongside quality of hire. Together they tell you whether you are spending efficiently and hiring well, which is the combination that matters. Either one alone can flatter a hiring process that the other would expose.