Cost of vacancy (COV) is the estimated value an organization loses for every day a position stays unfilled, including lost revenue or output, overtime and coverage costs, and slower service. The most common way to calculate it is: (annual revenue ÷ number of employees) ÷ working days per year × days the role is vacant. Because it puts a daily dollar figure on open roles, cost of vacancy is the clearest way to show finance why faster hiring, and the job advertising that drives it, pays for itself.
What Does Cost of Vacancy Measure?
Cost per hire tells you what you spent to fill a role. Cost of vacancy tells you what you lost while the role sat open. The two pull in opposite directions: cutting job advertising lowers cost per hire on paper but can lengthen time to fill, which raises cost of vacancy.
Recruiting strategist Dr. John Sullivan, who popularized the metric, is clear that there is no single standardized formula. Companies pick the version that fits the role and the data their finance team trusts.
How Do You Calculate Cost of Vacancy?
Sullivan describes several approaches. The three most usable are:
| Method | Formula | Best for |
|---|---|---|
| Revenue per employee | (Annual revenue ÷ employees) ÷ working days × vacant days | Quick, company-wide estimate |
| Salary multiplier of revenue | Multiplier = revenue per employee ÷ average salary; daily COV = multiplier × role’s daily salary × vacant days | Roles where pay tracks value |
| Simple salary multiplier | Daily salary × a multiplier of 1 to 3 × vacant days | Support or non-revenue roles |
Sullivan uses 220 working days per year. He notes the revenue-to-salary multiplier is usually between two and seven, and suggests a 1x salary multiplier needs no justification, while anything above 2x should be agreed with finance.
What Is a Worked Example of Cost of Vacancy?
Take a hypothetical company with $50 million in annual revenue and 250 employees.
- Revenue per employee: $50,000,000 ÷ 250 = $200,000
- Daily revenue per employee: $200,000 ÷ 220 = about $909
- If a role stays open 44 days (SHRM’s 2025 median non-executive time to fill): 44 × $909 = about $40,000
Compare that with SHRM’s 2025 median non-executive cost per hire of $1,200. Even if this estimate is off by half, the cost of an open role dwarfs the cost of filling it. Cutting 10 days off time to fill in this example recovers about $9,000 per role.
These inputs are illustrative. Use your own revenue, headcount and time-to-fill data, and agree the method with finance before you present it.
How Long Do Roles Stay Vacant?
Time to fill is the multiplier in every cost-of-vacancy formula, so the benchmark you use matters:
- SHRM 2025 Recruiting Executives Benchmarking: median time to fill of 44 days for non-executive roles and 45 days for executive roles, rising to about 60 days at organizations with 5,000+ employees.
- Workday Global Workforce Report (October 2026): time to fill held steady at about 60 days across Workday customers, even as the median number of applicants per filled job rose to 69 from 58.
More applicants have not shortened vacancies. Workday reports that roles mostly stay open because candidates lack the right skills or because pay, location or flexibility do not match. That is a targeting problem, not a volume problem.
What Costs Does a Vacancy Create Beyond Lost Revenue?
Formulas capture direct output. Surveys show the spillover. In a vendor survey of 750 US employees involved in hiring (Connext Global, August 2026):
- Respondents estimated a single unfilled critical role costs about $14,700 a month (a modeled average of the ranges respondents chose)
- 47% said a manager or executive stepped in to cover the work
- 46% saw slower response times to customers
- 41% said a long vacancy led another employee to resign
- 20% do not track vacancy cost at all
Treat these as directional, since they come from a staffing vendor’s survey, but they show why the true cost is usually higher than revenue-per-employee math alone.
Cost of Vacancy vs Cost Per Hire: What Is the Difference?
| Cost per hire | Cost of vacancy | |
|---|---|---|
| What it measures | Money spent to fill a role | Value lost while the role is open |
| Driven by | Advertising, agency fees, recruiter time, tools | Days vacant × daily value of the role |
| Goal | Spend efficiently | Fill faster |
| Risk of optimizing alone | Slower hiring, longer vacancies | Overspending on low-value roles |
The right goal is the lowest total cost: cost per hire plus cost of vacancy. Joveo’s guide on how to reduce cost per hire without sacrificing quality covers the spend side; cost of vacancy is the counterweight.
How Does Cost of Vacancy Change Job Advertising Decisions?
- Prioritize spend by vacancy cost, not just by requisition count. A revenue-generating role with a high daily COV justifies a higher bid and faster pacing than a backfill with low daily impact.
- Measure time to fill alongside cost. Track both time to fill and time to hire by role family so you can see where delays come from.
- Spend on qualified applicants, not raw volume. With applicant counts rising and time to fill flat, the fastest path to a shorter vacancy is reaching the right candidates. Pricing on cost per qualified applicant aligns spend with that goal.
- Let automation move budget toward the costliest gaps. Programmatic platforms like Joveo adjust bids and budgets by job in real time, so high-COV roles get more exposure the moment performance lags, instead of waiting for a weekly review.
Frequently Asked Questions
What is cost of vacancy in simple terms?
It is the money or value a company loses each day a job stays unfilled, usually estimated from revenue per employee or a multiple of the role’s salary.
What is the cost of vacancy formula?
The most common version is (annual revenue ÷ number of employees) ÷ working days per year × days vacant. Dr. John Sullivan uses 220 working days per year.
How much does an unfilled position cost?
It depends on the role and company. In a hypothetical $50 million, 250-person company, a role open for 44 days costs about $40,000 in lost revenue per employee. A 2026 vendor survey put the average for a critical role at about $14,700 a month.
Is cost of vacancy the same as cost per hire?
No. Cost per hire is what you spend to fill a role; cost of vacancy is what you lose while it stays open. Managing both together gives the true cost of hiring.
How can employers reduce cost of vacancy?
Shorten time to fill by targeting qualified candidates, prioritizing high-impact roles in your advertising budget, and using automation to rebalance spend as performance changes.
