Every hiring manager knows an open role costs something. Very few can say what, and the figures in circulation do not help: most of them are a single number with no arithmetic attached, published by somebody who benefits from it being large. We sell placements, so that caution applies to us too, which is why what follows is the working rather than a headline figure.
A cost of vacancy is arithmetic. Every input is arguable, and once you can see which one is carrying the answer, you will be arguing about the right one.
What belongs in the number
Three things, and one that keeps getting counted by mistake.
The output the seat is not producing. A role is opened because somebody expects the work to be worth more than the person costs. Express that as a multiple of the fully loaded cost and you have the first component. A multiple of 2.0 says an engineer returns twice what they cost, which is a conservative planning figure rather than an ambitious one.
The drag on the people covering. The work does not stop when the seat empties. It queues behind the remaining team, who pick up the on-call, the reviews and the context switching. Five per cent of a team of six is roughly a third of an engineer, absorbed quietly and never booked anywhere.
Time, in working days. A role open for 60 calendar days has been open for about 36 working days. Using calendar days against a daily rate derived from an annual salary overstates the cost by nearly 40 per cent, which is one way the published figures get to be so big.
What does not belong is the recruitment fee. You are paying it whether the role fills today or in March. It is a cost of hiring, and putting it inside the cost of vacancy double counts the very thing the number is usually being used to justify.
The working, on a real band
Take a senior software engineer in Sydney. Our 2026 band for that role is AUD 160-190k, so call the offer 175,000 at the midpoint.
Superannuation at 12 per cent, NSW payroll tax at 5.45 per cent and about 3 per cent for workers compensation and the rest put the employer on-costs at 20.5 per cent, giving a fully loaded annual cost of 210,788. Over 220 working days that is 958 a day.
At a value multiple of 2.0, the output not being produced is 1,916 a day. Add a team of six losing 5 per cent of their time and the drag is another 287. The role is costing about 2,204 a working day, or 11,018 a week.
Gem's 2026 benchmark data puts engineering and technical roles at 62 days from open to hire. On these assumptions, a median search costs 82,351 while it runs. That is roughly half the salary of the person you are hiring, spent before they start.
The assumption you pick for the value multiple decides most of the answer. Anyone quoting you a cost of vacancy has picked one and not shown you.
How much the assumptions move it
Same role, same 62 days, different views of what an engineer is worth and what covering costs the team:
- Value multiple 1.0, no team drag: 35,805. The floor, where the role breaks even on its own cost and everyone else absorbs the gap for free.
- Value multiple 2.0, 5 per cent drag on six people: 82,351. The defaults above.
- Value multiple 3.0, 5 per cent drag on six people: 118,156. Defensible for a team shipping revenue-critical work, and the row a supplier would quote you.
A range of 36,000 to 118,000 for the same vacancy is not a failure of the model. It is the honest output, and it tells you where the argument lives. If you and your CFO disagree about the cost of an open role, you are disagreeing about the value multiple, and that is a conversation worth having on its own terms.
What the number is good for
Not for a business case in isolation. A daily figure with three assumptions inside it will not survive contact with a finance team, and it should not.
It is good for one question, which is whether a known one-off spend is worth it to close a role sooner. That comparison works because it sets a fixed cost against a running one and leaves the decision where it belongs. At 2,204 a working day, a 30,000 spend is worth it if it saves about 23 calendar days. A 42,000 spend needs about 32.
Whether your search will move that much faster for the money is a separate question, and it is the one to interrogate. The arithmetic only tells you the size of the prize.
The second use is quieter and more common. A role that has been open for four months, with the requirement unchanged and the band unchanged, has usually already spent more than the gap between the band and what the market would have accepted in June. Putting a number on that is how the conversation about the band finally happens.
What actually shortens it
Time to hire is mostly decided before the advert goes up. The three things that move it in our own searches:
- Sign off the band before the role opens. Not a range to be discussed later. The number you would pay a strong candidate at this level, approved by whoever has to approve it.
- Block the loop in advance. Interviewer diaries held before the first CV arrives. Most of the 62 days is waiting, and most of the waiting is yours.
- Agree one approval chain. A second approver discovered at offer stage costs a week, and often the candidate.
Robert Half's 2026 Australian research found 88 per cent of employers lost at least one candidate over the past year, with salary expectation mismatches and competing offers among the barriers they expect this year. Both of those are time problems as much as money problems.
Run it on your own numbers
The Cost of Vacancy calculator is the model above with every assumption exposed as an input, including the value multiple and the team drag, so you can put your own economics in and take the output somewhere. If you need the loaded cost first, the Cost to Hire calculator adds superannuation and payroll tax by state.
Neither will tell you to use a recruiter, and the cost of vacancy figure they produce is only as good as the multiple you choose. That is the point of showing the working.