How to calculate the true cost of recruitment for employers

Recruitment Bootcamp |
September 8, 2023 |
5 minute read
Liz Gadd
Cost to Hire Calculator

Have you ever wondered exactly how much it costs to hire a new team member?

As the quest to attract the best candidates intensifies, it is essential to evaluate the real cost of bringing new talent on board. This can help you to forward-plan and budget as your creative agency or organisation grows.


When we set up our own businesses, it may begin with just us on our own. We’re servicing the clients, book-keeping, generating invoices, and we might be the HR department too. Perhaps we win a big client project or retainer, and we start to work with freelancers, contractors and other suppliers to grow our company’s capacity. Maybe at some point we might decide to recruit our first employee.


What may not happen for us is any training around how to recruit. There is already so much to think about, with running the company, keeping afloat and looking after clients, that learning recruitment techniques might not be something we feel we have the time or money to invest in. And so perhaps we make our first hire without that training, either with or without the support of a recruiter or HR company. And as the company grows, so does our role as a leader, but it’s possible we might never make that time to learn about recruitment, and one day we’re running a small or medium-sized agency and we’re still not sure how to go about recruiting, but we seem to be muddling along okay.


If this sounds like you, please don’t worry, you’re definitely not alone. And if it feels like now’s a great time to start understanding the skills around making your next hire, you’ve come to exactly the right place. Here are some common questions you might be wondering about as you grow your team:


  • How to calculate and forecast the real cost of taking on a new full-time or part-time employee 
  • Is it better value to hire a freelancer or an employee?
  • How to decide on an employee salary and benefits package


Let’s look at each of these questions in turn. 

Calculating and forecasting the real cost of hiring an employee. 


In the short-term you’ll want to budget for the actual recruitment process, such as placing job ads and setting up desk space or remote working, equipment, onboarding and so on. But looking further down the line, we also need to think about the ongoing costs when we’re budgeting for a new employee. There are the very obvious costs such as salary, national insurance and pension contributions and also, you’ll want to factor in benefits and bonuses, training days and business travel and you may want to consider private healthcare and relevant insurances too. Creating a competitive package with retention in mind is strategic and worth spending extra time on when you want to attract the right candidates for the long run. 


Recruitment Bootcamp founder, Liz Gadd, who is an expert with more than 30 years’ experience says:


“When I started in recruitment in the early 90s, there were around 10 candidates for every job. Now there are about 10 jobs for every candidate. It’s increasingly hard to attract and retain people and so creating a competitive package that you can afford is one of the first steps, before you think about advertising a vacancy.”


Recruitment Bootcamp’s experts have created a comprehensive calculator* to assess the likely cost of taking on a new employee or employees. It will act as a practical guide for agency owners and those responsible for in-house recruitment, who are unsure of the real cost of bringing new talent on board. It sits alongside workbooks, audio learning and a wealth of resources to guide you when you’re expanding your agency. It might feel daunting but with this step-by-step expert information, you can feel supported and guided.


Is it better value to hire a freelancer or an employee?


There’s no right answer to this but here are some of the pros and cons, financially, of hiring an employee versus a freelancer:


  • While the upfront costs of hiring an employee are likely to be higher than hiring a freelancer, an employee is a long-term investment in your business and its growth and expertise.
  • Freelancers can add talent and value at short notice and are great for short-term ad-hoc and specialised projects, without long-term commitment. 
  • Freelance day rates can add up if you use them in lieu of a permanent employee. The reason freelancer day rates are higher than the equivalent day rate of an employee is because they are responsible for their own equipment, finances and overheads, which all need to be factored in to their day rate, unlike a PAYE employee.


How to decide on an employee salary and benefits package?


Liz Gadd says she is often asked by employers how to set a salary for employees:

“Competitive salaries are not only a way to attract strong candidates, but they will also provide a gauge for the sort of experience you’re looking for. A £50k a year Marketing Manager role will receive different applicants compared to, say, a £25k a year Marketing Manager vacancy. Candidates will be looking beyond the title to understand the level of expertise and responsiblity required and they will also be looking at the full package, beyond the salary.”


As well as choosing the range or figure to set the salary at, which you may wish to research and benchmark against similar creative roles in the PR or marketing world, it’s also important to think about what benefits you offer or plan to offer. Liz explains:


“Gone are the days when candidates are queuing up to apply for the roles with the snazzily branded company Mini. Although that perk might still attract some employees, the trend has swung more in favour of homeworking, flexibility and hybrid-working and so when creating your package, consider contemporary ideas such as the 4-day week, for example. Flexible packages such as this may actually cost you less as an employer and attract a wider range of interested candidates.”


And don’t even think about not advertising the salary. Some employers try this for various reasons but it’s likely to backfire:


“Failing to show the salary on a job advert is a rookie error. I’ve heard all the excuses why people don’t do this, from employee confidentiality to competitor advantage, but in truth, not revealing the salary or range is just cutting corners and it reflects poorly on the employer’s reputation.” Advises Liz.


How our budget forecasting tools work for recruiters:


The Cost to Hire Calculator (CTHC)* will enable you to determine the true costs of employing people, including salary, national insurance and pension contributions, training and all other cost related aspects of having a permanent employee in your business.  And the Cost of Recruitment Calculator (CORC)* will help you work out how much you need to budget for the costs of bringing a new person into the team, including the cost of resources and advertising.  You can also track actual costs in a particular campaign to see where reductions or changes can be made.


You can access them either by joining Recruitment Bootcamp or by booking a recruitment strategy and advice session with expert Liz Gadd.

If any of these issues are coming up for you in your business at the moment, don’t hesitate to get in touch. Recruitment Bootcamp and Liz Gadd are here to help you and guide you in the art of recruitment. 


*These tools have been developed by Recruitment Bootcamp, Gadd & Gadd Ltd and Detype Ltd with the intention to provide valuable insights for budgeting and cost analysis purposes. It is essential to acknowledge that the tool is intended as a guideline and should be used solely for information.


We emphasise that the figures generated by the tool are not binding and should not be treated as definitive financial advice. As such, any reliance placed on the results is entirely at the user’s discretion and risk. Recruitment Bootcamp, Gadd & Gadd Ltd and Detype Ltd hold no liability for the outcomes derived from the tool’s usage, nor do we accept responsibility for any decisions made based on the data provided.*


Liz Gadd

Liz has been working as a recruiter for three decades, working within marketing and PR since 1992, and of course more recently in social media and digital marketing recruitment.

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