Cost of vacancy formula: what an empty seat costs per day, worked from your own numbers

Cost of vacancy is what an empty seat costs the business for each day it stays empty. The working formula is: daily cost of vacancy = value of output not produced + cover costs + knock-on costs − pay and benefits not spent, and total cost of vacancy is that daily figure multiplied by the working days the seat is empty. There is no standard per-day figure as of October 2026; the number is only useful when it is built from your own revenue, output and payroll data, which is how this page works it.

It is a different question from cost per hire (what filling the seat costs) and cost of a bad hire (what filling it wrongly costs, which includes a vacancy line). Cost of vacancy is the one that tells you which open requisitions to work first and whether a faster, more expensive route to a hire pays for itself.

What goes into the cost of vacancy formula?

Daily cost of vacancy =
    Lost value      (work the seat would have produced and nobody else does)
  + Cover costs     (overtime premium, temps, contractors, borrowed staff)
  + Knock-on costs  (service credits, penalties, delayed launches, documented)
  − Pay not spent   (salary or wages plus benefits for the empty seat)

Total cost of vacancy = Daily cost × working days vacant
                      + partial daily cost × ramp-up days after the start date

For the benefits multiplier, our cost of a bad hire page works one from the Bureau of Labor Statistics' Employer Costs for Employee Compensation release; use your own finance team's figure if you have it.

When does the vacancy clock start and stop?

• Backfills: from the departing employee's last working day, not the day the requisition was opened. A two-week notice period is free time to recruit; a requisition opened a month after the exit is a month of vacancy cost the recruiting team never saw.
• New roles: from the date the work was planned to start, usually the date in the approved business case or headcount plan. A new role business case should state it.
• Stop: at the new hire's start date, then count a partial cost while they ramp up. If a new hire reaches full output after 60 working days and averages half of it in that period, add half the daily lost value for those 60 days. Measuring the ramp is covered in time to productivity.

Worked example 1: a revenue role

Use margin rather than bookings or revenue, because the cost of delivering the revenue is not lost along with it. Ask too whether the revenue is lost or only delayed: renewals the account executive would have closed may still close when the replacement arrives, while new business a competitor wins is gone.

Worked example 2: a role covered by overtime

The overtime rate in this example follows the Fair Labor Standards Act rule that covered, non-exempt employees must be paid at least one and a half times their regular rate for hours over 40 in a workweek (US Department of Labor, as of October 2026; state rules can be stricter). The cash cost is modest because most of the work is covered and the vacant seat's wages offset the premium. What the number does not show is three people working 50-hour weeks for six weeks. Note that risk next to the figure rather than inventing a dollar value for it; if one of them resigns, the cost becomes measurable.

How do you use cost of vacancy to rank requisitions?

Work out the net daily figure for every open requisition and sort by it. In the two examples, a day of delay on the account executive costs about $800, and a day on the support agent about $142 ($710 ÷ 5). With one recruiter's week to spend, the order is obvious, and the hiring manager of the lower-ranked role can see why. Re-run the ranking when cover changes: if the support team's overtime stops, that role's daily cost jumps.

REQ RANKING BY DAILY COST OF VACANCY (week of [date])
Req   Role                 Vacant since   Net daily cost   Basis
101   Account executive    [date]         $800             Margin, 80% unrecovered
117   Support agent        [date]         $142             Overtime + service credits
...
Inputs owner: [finance contact]   Next refresh: [date]

How do you use it to justify an agency fee or a faster process?

Compare what a faster route costs with the vacancy days it saves. Using example 1: if an agency quote is $14,000 for the account executive search (an example figure; use your actual quote and terms) and you expect it to shorten the vacancy by 25 working days, the saving is 25 × $800 = $20,000 against a fee of $14,000, before counting the internal recruiting time either route needs. For the support agent in example 2, the same 25 days are worth about $3,550, so the same fee would not pay for itself.

The same arithmetic applies inside the process. If faster interview scheduling or same-week feedback takes ten working days off time to fill, multiply ten by the daily cost. Our guide to reducing time to fill lists where those days usually go, and how to push back on a hiring manager shows how to put the figure in front of someone who is holding out for a perfect candidate.

Agency recruiters: how do you use it with clients?

Ask for the inputs at intake: what the role produces, who is covering it now and at what cost, and whether any contract penalties or launch dates depend on it. A client who says "nobody is covering it and we are losing deals" has a high daily cost and will usually move faster on feedback. A client whose seat is fully covered may be telling you the search is not urgent, which is worth knowing before you commit desk time. Agree the figure with the client rather than presenting your own estimate as fact.

Common mistakes