Recruitment vs Direct Hire Calculator
Agency vs in-house hiring cost.
Compare recruitment agency vs direct hire costs by calculating agency fees, job board spend, and vacancy productivity loss side by side.
What this tool does
This tool models the financial comparison between filling a vacant role through a recruitment agency versus hiring directly in-house. It calculates total cost for each approach by combining the upfront costs (agency fee or direct hiring expenses) with the estimated cost of lost productivity during the vacancy period. The result shows which path carries a lower total outlay for your specific situation. The comparison is most sensitive to the annual salary level and the difference in time to fill between the two methods—longer vacancies amplify the productivity loss component. A typical scenario might involve comparing a role that takes 60 days to fill via agency against 40 days for direct hiring, factoring in both the agency's percentage fee and your internal recruitment expenses. Note that this calculation assumes a standard productivity loss model during vacancies and does not account for factors like hire quality, retention rates, or ongoing employment costs beyond the hiring phase. Results are for illustrative comparison only.
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Formula Used
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Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Recruitment agency fees typically run 15-25% of first-year salary. Direct hiring avoids this fee but incurs job board costs, internal recruiter time, and usually longer time-to-fill. The total cost comparison must include vacancy cost - every day a role sits empty costs productivity (typically 50% of daily salary equivalent).
80k salary × 20% agency = 16,000 fee. Agency fills in 30 days, vacancy cost 80k/365 × 50% × 30 = 3,288. Agency total: 19,288. Direct: 3,000 job board/tools + 60-day fill × same vacancy rate = 6,575. Direct total: 9,575. Savings: 9,713 going direct. Clear win - if you have the internal capability to hire well.
Direct hiring requires: someone spending 20-40 hours per role on sourcing/screening, strong employer brand (candidates choose to apply), and well-designed interview process. Without these, direct hire saves money but produces worse hires - which costs far more long-term than the agency fee. Agency wins when speed matters, expertise is niche, or internal hiring isn't a core strength.
Run it with sensible defaults
Using annual salary of 80,000, agency fee of 20%, direct hiring cost of 3,000, agency time to fill of 30, the calculation works out to 9,712.33. The defaults are meant as a starting point, not a recommendation.
The levers in this calculation
The inputs — Annual Salary, Agency Fee %, Direct Hiring Cost, Agency Time to Fill (days), and Direct Time to Fill (days) — do not pull with equal force. Two inputs usually tip the answer one way or the other. Identify which ones matter most by flipping each value past a round threshold and watching whether the option with the lower calculated total changes.
How the math works
Agency total = fee + (vacancy days × daily salary × 50%). Direct total = hiring cost + (vacancy days × daily salary × 50%). Savings = agency - direct.
Using this as a check-in
Re-run this every three months. A single reading tells you where you stand; four readings tell you whether things are improving. The trend matters more than any individual snapshot.
What this doesn't capture
The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.
££80,000 × 20% + vacancy vs ££3,000 + vacancy = 9,712.33.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
The calculator computes the total cost of each hiring pathway and calculates the difference. For agency recruitment, it adds the agency fee (calculated as a percentage of annual salary) to the opportunity cost of vacancy time. For direct hiring, it adds the direct hiring cost to its own vacancy cost. Vacancy cost is modelled as half the daily salary (representing reduced productivity during the open position) multiplied by the number of days to fill. The savings figure represents the difference between these two total costs. The model assumes a constant daily salary rate, treats productivity loss uniformly at 50% during vacancies, and does not account for quality differences, retention rates, future salary changes, or indirect factors such as recruiter time allocation or onboarding efficiency.
References
Frequently Asked Questions
When is agency worth it?
Vacancy cost really 50%?
Hybrid approach?
Quality difference?
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