What does hiring actually cost?
How much does a recruitment agency charge in the UK?
UK recruitment agencies typically charge 15-20% of the hired person's first-year salary as a one-off placement fee. For a £30,000 role, that's £4,500-£6,000 per hire. The fee applies every time you hire, so a business making three hires a year can easily spend £15,000 or more on agency fees alone.
Specialist and senior roles often cost more, sometimes 25-30%. Most agencies offer a short rebate period if the hire leaves early, usually on a sliding scale.
Is it cheaper to hire without a recruitment agency?
Hiring without an agency is almost always cheaper in direct cost, because you avoid a placement fee of 15-20% of salary. The real trade-off is time and risk: without a structured process, founders often spend weeks screening CVs and still make decisions on gut feel, which raises the chance of a costly bad hire.
The cheapest route is not always the lowest-risk one. What matters is whether your own process is reliable, not just whether it's free.
What does a bad hire actually cost a small business?
A bad hire costs far more than their salary. The total includes recruitment costs, weeks of training and management time, lost productivity, the effect on the rest of the team, and the full cost of hiring again. For a small business, one bad hire can easily cost more than a year of the role's salary once everything is counted.
A widely quoted estimate puts the direct cost at around 30% of first-year salary, but that figure excludes the hidden costs, which in a team of five are usually the biggest part.
What are the hidden costs of hiring an employee in the UK?
Beyond salary, UK employers pay employer National Insurance contributions, a minimum 3% workplace pension contribution under auto-enrolment, employer's liability insurance, equipment and software, and the management time spent on recruitment and onboarding. These typically add a significant percentage on top of the advertised salary.
Check current National Insurance rates and thresholds on GOV.UK when budgeting, as they change between tax years.
Is recruitment software worth it for a small business?
Most recruitment software, known as applicant tracking systems (ATS), is built for HR teams managing many roles at once. For a founder making their first few hires, an ATS often adds admin without solving the real problem, which is deciding who is actually right for the business.
Typical ATS pricing runs from around £120 to over £1,000 a month. The question to ask is whether a tool improves your decisions, not just how it organises applications.
How much does it cost to advertise a job in the UK?
Posting a job in the UK can be free on many job boards, including a limited number of free posts on Indeed. Paid sponsorship increases visibility and is charged daily; Indeed's UK minimum sponsorship is £25 per day per job. Specialist boards and LinkedIn job posts usually cost more.
Free posts can work well for common roles in busy areas. Sponsorship matters more for specialist roles or quiet locations.
Should I pay a recruiter per hire or pay for a hiring system?
Paying per hire suits a business that hires rarely and wants the work done for them. A hiring system suits a business that expects to hire repeatedly, because the cost stays fixed while each additional hire gets cheaper and the business keeps the process after the hire is made.
The deciding factor is frequency. If you expect more than one or two hires in a year, per-hire fees add up quickly.