Cost to Train a New Employee in 2025: Benchmarks, Hidden Expenses & Formula
- Author: Urban Rotar
- Published:
In 2024, companies spent an average of $954 per learner, providing around 57 hours of training per new hire. Yet the true cost to train a new employee goes beyond direct expenses—like instructor fees and LMS subscriptions—to include indirect costs such as wages during training, lost productivity, and mentor time. Factoring in hidden consequences like higher turnover, training investments can yield massive returns—reducing replacement costs that often amount to 50–200% of an employee’s annual salary . This article breaks down full cost drivers, offers a clear formula, and reveals top ROI strategies for 2025.
What are the main factors that impact the cost of training a new employee?
The main factors include recruitment and advertising expenses, background checks, equipment costs, productivity loss during training, company size, type of training, and the new employee’s existing skill set.
How can businesses reduce the overall cost of training new employees?
Businesses can reduce costs by implementing skills-based hiring, using on-the-job training, employing microlearning tools, outsourcing training development, leveraging technology, and creating repeatable and scalable onboarding programs.
Why should training costs be viewed as an investment rather than an expense?
Training should be seen as an investment because it leads to improved employee retention, higher productivity, and long-term cost savings. Investing in employee development enhances their skills and engagement, which benefits the company’s overall success and profitability.
What Is the Average Cost to Train a New Employee?
Industry Benchmarks & Average Hours
In 2024, U.S. companies spent $774 per new employee, down from $954 in 2023; small businesses averaged $1,047 while large enterprises spent about $398 per person.
Training Magazine’s 2021 report placed the average at $1,071 per employee.
Global Variations & Company Size Impact
Mid‑sized firms (1,000‑9,999 employees) spent about $739 per learner, vs. small firms at $1,047 and large at $398.
Developing economies or highly regulated sectors may see significantly higher per‑employee costs.
What Costs Are Included?
- Direct Costs (Materials, Trainers, LMS) Direct expenses cover instructor fees, training materials, e‑learning platforms, software subscriptions, travel, and venue rentals.
- Indirect Costs This includes wages paid during training hours, reduction in productivity, HR/admin support, and mentor time.
What Drives Training Cost Variance?
Company Size & Economies of Scale
The size of a company heavily influences the cost to train a new employee. Smaller businesses often face significantly higher per-employee training expenses because fixed costs—such as course development, instructor fees, or LMS licenses—must be spread across fewer individuals. On average, small firms invest more per person compared to large enterprises, which distribute the same overall cost among many employees.
For example, European small businesses (10–19 employees) allocate just 1.5% of labour costs to training, well below the 2.3% average.Moreover, U.S. midsize and large companies have reduced per-learner spending—from $1,420 to $1,047 for small firms and from $481 to $398 for large enterprises—underscoring how scale drives down unit cost.
Employee Skill Level & Role Complexity
Training costs are closely tied to the incoming employee’s skill level and job complexity. Individuals filling advanced or technical positions require more detailed, specialized instruction—often delivered by higher-skilled trainers or using advanced materials and tools. Though this ups the per-employee expense, it is typically balanced by increased efficiency, higher-quality output, and reduced rework.
Training Delivery Method (In‑Person, Online, On‑the‑Job)
The mode of training delivery plays a decisive role in overall costs. Traditional in-person training incurs expenses for instructor travel, classroom space, printed materials, and scheduling logistics. It typically costs more per session and per employee. In contrast, online and on-the-job training/learning tend to be far more scalable and cost-efficient once the initial setup—such as LMS infrastructure or recorded content—is in place .
Further, blended learning, which mixes e-learning modules with occasional in-person or virtual instructor sessions, lets companies reduce overhead while maintaining engagement—often reducing costs by 35%–60% compared to fully live formats . On-the-job training (OJT) ensures trainees learn in real work contexts, minimizing lost productivity and resource-use inefficiencies—yet it requires deliberate planning to avoid burdening mentors unduly.
Hidden Expenses You Might Be Missing
- Manager & Mentor Time
Mentorship time is often overlooked but critical, tapping managerial time and diverting focus. - Turnover Cost Due to Poor Onboarding
Undertrained employees are 2× more likely to quit, costing 50–200% of annual salary in turnover expenses. - Facility & Overhead Utilization
Use of offices, equipment, utilities for training adds overhead, often untracked.
How to Calculate Your True Training Cost
Step‑by‑Step Cost Formula
To accurately measure the cost to train a new employee, use this widely accepted formula:
Cost per new employee = (Total direct costs + Total indirect costs) Ă· Number of trainees
This method aligns with industry best practices, ensuring you’re capturing the full investment required to train each employee.
Real‑World Example Calculation
For instance, imagine your training budget includes:
- $5,000 for your LMS setup and content
- Indirect labor cost of $2,100 (calculated as 10 trainees Ă— 6 hours Ă— $35/hour)
The total training expenditure is $7,100. By dividing that by 10 participants, you determine a cost of $710 per employee. This approach ensures you’re accounting for both visible (software, trainers) and hidden (wages, admin) costs—providing a clear average training cost per trainee that’s essential for budgeting and ROI assessment.
Trends Shaping Employee Training in 2025
- Rise of LMS, E‑learning & Mobile Micro‑learning
Mobile and AI‑powered training platforms reduce costs by 35–60% and improve engagement. - AI‑Powered Onboarding & Interactive Video
Interactive platforms (like Smart Arena) offer immersive onboarding with virtual walkthroughs, reducing instructor time and boosting retention.
Smart Arena's Onboarding
Smart Arena’s onboarding with LMS enables immersive simulations for workspace familiarization and policy training—delivering impactful experiences while reducing instructor hours and travel logistics.
Crafting Lasting Value from Training Investments
Investing in the cost to train a new employee goes well beyond paying for training materials and instructor time. By understanding both direct and hidden costs—and using a clear calculation framework—you gain the clarity needed to optimize resources, boost productivity, and significantly reduce turnover expenses.
Platforms like Coursly.ai supercharge this process. Coursly’s AI-powered course creation, instant translations, and real-time collaboration make onboarding faster, more engaging, and less costly. With dedicated tools to align training to roles, scale across teams, and analyze learner outcomes, organizations can deliver high-quality training at a fraction of the usual cost.
If you’re ready to transform training from a cost center into a strategic investment, explore how Coursly.ai can help you design, deliver, and measure impactful onboarding—and unlock true ROI.
👉 Try Coursly.ai today to calculate, optimize, and elevate your training programs.
