What Recruitment Agencies Charge and How to Compare Fees
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Recruitment agencies charge in five main ways: a one-time fee per hire, a retainer paid in stages, a markup on an hourly bill rate, an all-in monthly rate, or a subscription to a talent network. Few agencies publish their numbers, so the way to compare them is to put the same questions to each and get the answers in writing.
Per-hire (contingency) fee · Retainer (retained search) · Markup on a bill rate (contract and temporary staff) · All-in monthly rate (managed overseas hire) · Subscription or platform fee
Per-hire (contingency) fee
How it works: You pay once, when the candidate accepts or starts. The fee is usually a percentage of the hire's first-year salary, set in the contract.
Used for: Permanent placements through staffing firms and direct-hire offshore services.
A published example: Somewhere's Direct Hire charges a one-time percentage of first-year salary once the offer is signed, with a deposit credited toward it; the percentage is not published. Source: somewhere.com/pricing
Watch for: What counts as salary (base only, or bonus too), when the invoice is due, and what is refunded if the hire leaves early.
Retainer (retained search)
How it works: You pay in stages, typically at the start of the search, at a milestone such as the shortlist, and on completion. Part of the fee is due whether or not you hire.
Used for: Executive search for CEO, C-suite and board roles.
A published example: Heidrick & Struggles describes itself as a retained firm that works on an exclusive basis; none of the five executive firms we rank publishes its fee. Source: heidrick.com
Watch for: The fee basis, each stage's amount and date, expenses billed on top, exclusivity and what happens if you cancel or hire your own candidate.
Markup on a bill rate (contract and temporary staff)
How it works: The agency employs the worker and bills you an hourly or daily rate: the worker's pay plus a markup that covers payroll taxes, benefits, insurance and the agency's margin.
Used for: Temporary, contract and contract-to-hire staffing.
A published example: Insight Global states that on contract roles, compliance, payroll and benefits sit with the agency; the markup is not published. Source: insightglobal.com
Watch for: The worker's pay rate versus your bill rate, overtime rules, and the conversion fee if you hire the person permanently.
All-in monthly rate (managed overseas hire)
How it works: You pay one monthly amount that covers the person's pay and the agency's service: recruiting, contracts, payroll, HR and replacement.
Used for: Managed offshore and global hiring, and managed virtual assistants.
A published example: Hire Overseas publishes a floor of $2,000 a month all in, with most roles between $2,000 and $4,000, no recruiting fee, month to month. Source: hireoverseas.com/pricing
Watch for: What the rate includes line by line, whether a setup or recruiting fee is added, the notice period and what happens to the rate when the role changes.
Subscription or platform fee
How it works: You pay a recurring fee for access to a talent network, on top of the talent's own rate.
Used for: Freelance and on-demand talent networks.
A published example: Toptal publishes a $79 monthly subscription once matching starts; hourly talent rates are not published. Source: toptal.com/faq
Watch for: The talent's hourly rate, minimum hours, and whether the subscription continues when no one is engaged.
How to compare fees across models
Fees in different models can't be compared on the headline number. Turn each quote into the same figure: the total cost of the hire over the first 12 months, including the person's pay, the agency's fee or margin, payroll and benefits you would carry yourself, and what you would pay again if the hire left in that year.
- Per-hire fee: the fee, plus 12 months of salary and your own employment costs.
- Retainer: every stage payment and expenses, plus 12 months of compensation.
- Markup: your bill rate times the hours you expect to use, plus any conversion fee.
- All-in monthly rate: the monthly rate times 12, since pay, payroll and replacement are already in it.
An employer of record is a sixth cost you may see: it employs someone you already found, for a monthly fee, but does not recruit. Remote, for example, publishes EOR pricing from $599 per employee per month on remote.com/pricing.
Questions to ask so there are no surprise invoices
- What exactly will I pay, and when is each invoice due?
- Is the fee a percentage? Of what: base salary, or total first-year compensation?
- Is anything due before a hire is made (a deposit, a retainer, a setup fee)? Is it refundable?
- What is your markup or margin on the worker's pay?
- What happens to the fee if the hire leaves in the first months: a replacement, a refund, or neither? For how long?
- Who employs the person, runs payroll and carries the compliance risk?
- Is there a minimum term, an exclusivity clause, or a fee to cancel?
- If I convert a contractor to a permanent hire, what is the conversion fee?
- Are expenses (advertising, travel, background checks) billed on top?
- Can I see the full fee schedule and contract before the first search starts?