How much are recruiting fees, anyway?
If you’re in the market for recruiting services, keeping track of the different pricing models, fees, and retainers can get confusing fast.
Prices can vary wildly even for the most basic recruiting services. Throw in hidden fees and costs, and it can be difficult to know how much to budget.
If you’re wondering what to expect, this article covers everything you need to know about recruiting fees.
How Much Are Recruiting Fees With Commissioned Recruiters?
Commissioned recruiters, otherwise known as contingency agencies, charge you a commission when they’ve placed a candidate in your open role. But how much are recruiting fees at these firms?
Typically, they charge 15-25% of an employee’s first year salary. This payment is due when the placement is made. In other words, clients are billed when a candidate accepts an offer.
How Much Are Recruiting Fees With Retained Executive Search Firms?
Retained search firms operate with a different model. These firms typically bill clients a fee upfront, another fee partway through the process, and a final fee when a candidate is placed.
How much are recruiting fees at retained firms? Most search firms using this model will charge 30-33% of the first-year salary of the candidate.
How Much Are Recruiting Fees With Contingency Executive Search Firms?
Contingency executive search firms are a lot like commissioned recruiters. In a nutshell, they charge you a commission when they’ve placed a candidate in your open role.
These firms generally charge 20-25% of the first-year base salary of the candidate.
How Much Are Recruiting Fees With Hourly Pricing Models?
At Qualigence, we use a different pricing model for our recruiting services and executive search.
We charge an hourly rate for a pay-as-you-go approach.
Our recruiting services are capped at 19%. This means that you’ll pay us an hourly rate for the time it takes to fill the position, but you’ll never pay more than 19% of base salary. If we finish the search before we’ve hit 19% CPH, you pay less.
Our executive searches work the same way, but with a 22% cap. You pay for the actual hours or the cap, whichever is less.
Consider the Value You’re Getting
Of course, price isn’t everything. A bad hire can easily cost tens of thousands or more in the long run. Meanwhile, a great hire can add even more in revenue generated or twice their weight in gold in excellent performance.
Think about what different models incentivize. If you’re a commissioned recruiter, you’re most profitable if you make hires fast and often. But there’s no incentive to make sure those hires are quality.
Think about retained search firms. When you have to pay them an upfront fee, you’re paying a large sum of money before you’ve received anything of value.
What if plans change, or you decide to go in a different direction? Now you’re out a lot of money with nothing to show for it.
With an hourly model, you don’t have to pay an expensive upfront fees. You also can rest assured that nobody is rushing the process to cash a commission check.
Higher Fees Don’t Always Mean Higher Quality
You should never pick a recruiting firm based on price alone. But on the flip side, just because a company charges more doesn’t mean they’re guaranteed to deliver higher quality. You have to look at all the different factors together to determine which company and service is best for you. Consider the business model, their recruiting process, what’s included in the price, and whether there are any hidden fees.
Ultimately, only you can decide the right company and service for your needs!