How to Reduce Your Recruiting Budget for Startups in February 2026
Dover
February 10, 2026
•
5 mins
Most startups track agency fees and job board costs, but the real numbers tell a different story. Your actual cost per hire includes recruiter salaries, hiring manager time spent reviewing resumes and conducting interviews, lost productivity from unfilled roles, and coordination overhead.
According to SHRM, the average cost per hire is nearly $4,700, but for startups filling specialized roles, that number often doubles or triples. If your engineering manager spends 15 hours interviewing candidates at a $150/hour fully loaded cost, that's $2,250 before you've even extended an offer.
Track these five categories for your next three hires: external costs (agencies, job boards, tools), internal labor costs (interviewing time valued at hourly rates), administrative overhead, time-to-fill costs, and onboarding expenses.
Many early-stage startups pay $500 to $1,000 per month for enterprise ATS solutions built for companies hiring hundreds of people. If you're making 5-10 hires per year, you're paying $1,200+ per hire just for tracking software.
Tools like Greenhouse and Lever charge per-user fees and come loaded with features you won't touch until you have a full HR department. Free ATS options now include everything you need: candidate tracking, interview scheduling, team collaboration, job board distribution, and career page builders.
Traditional recruiting agencies charge 20-25% of first-year salary, meaning a single $120,000 engineering hire costs you $30,000 in agency fees. For multiple hires, you're looking at six figures in placement costs.
Recruiting Model | Cost Per Hire | Payment Structure | Best For |
|---|---|---|---|
Traditional Agency | $30,000 (20-25% of first-year salary for $120K role) | Contingency fee upon placement | Companies with urgent, hard-to-fill roles and budget flexibility |
Fractional Recruiter | $2,000-$7,000 | Hourly billing for dedicated work on your roles | Startups needing flexible recruiting support without long-term commitment |
Dover (Free ATS + Marketplace) | $2,000-$7,000 (via marketplace recruiters) | $800 refundable deposit, hourly billing for recruiter services | Startups wanting free ATS tools plus on-demand recruiting help |
Employee Referrals | Under $1,000 | One-time referral bonus ($1,000-$2,500) | Using existing team networks for culture-fit candidates |
In-House Recruiting | $4,700 (industry average including all internal costs) | Full-time recruiter salary plus overhead | Companies making 50+ hires annually with consistent volume |
The bigger problem is incentive misalignment. Agencies get paid when someone accepts an offer anywhere, not when you find the right person for your needs.
Fractional recruiters work differently. They're paid hourly to focus exclusively on your roles, becoming an extension of your team. Most companies spend $2,000 to $7,000 per hire through fractional models, less than a quarter of agency costs.
Build an Employee Referral Program That Actually Works
Your team already knows talented people who'd be great fits. The problem is most referral programs fail because they're passive: a line in the employee handbook nobody reads.
Successful referral programs can bring cost per hire under $1,000 compared to the $4,700 average. Make yours work by setting clear bonuses ($1,000-$2,500 depending on role difficulty), sending monthly reminders with specific open roles, and making submissions dead simple with a dedicated form or Slack channel. Track referral sources in your ATS so you can see which team members consistently bring strong candidates.
Expand Your Talent Pool with Remote Hiring
Geographic restrictions force you to compete with giant tech companies for the same talent pool. Opening roles to remote candidates slashes salary costs while giving you access to qualified people who aren't fielding five other offers.
Start with roles that don't require constant overlap with your core team hours. Backend engineers, designers, and customer support can work asynchronously. Set clear communication expectations and use tools like Loom for updates that don't need real-time calls.
Automate Your Screening Process with AI Tools
Manual resume screening wastes valuable time when 200 applications can mean 100+ hours of work. AI-powered screening ranks candidates against your specific criteria (skills, years of experience, education) and surfaces the top matches automatically.
The system handles the initial filter, flagging clear mismatches and focusing on qualified applicants while keeping everyone in your pipeline. You still make all hiring decisions, but spend your time reviewing pre-qualified candidates instead of every single resume.
This approach lets small teams manage higher application volumes without adding headcount. You can expand your reach across more job boards and sourcing channels while keeping your review workload manageable.
Optimize Your Job Posting Distribution Strategy
Reduce Time to Hire to Minimize Vacancy Costs
Look into Internship Programs and Contract-to-Hire Models
How Dover Combines Free Tools with Affordable Recruiting Support
Frequently Asked Questions
Final Thoughts on Lowering Your Startup Recruiting Expenses
Your recruiting budget should support growth, not quietly drain your runway. To reduce your recruiting budget, startups need a simpler way to hire that cuts waste across software, sourcing, and execution without slowing teams down. Dover brings that together by pairing a free ATS with on-demand fractional recruiters, so you only pay for help when it actually moves a role forward. Instead of stacking $30,000 agency fees on top of bloated tools, teams can hire with clarity, control costs per role, and keep savings compounding as they scale using a solution like Dover.
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