How Much Do Recruiters Charge?

 I can’t tell you how many times a person asked me how much my firm cost. They assumed that recruiters charged. And it’s not a bad question.

And I’ve also had companies contact me (and every other recruiter I know has as well) who have asked if they have to pay a fee.

The answer is different depending on the agency you contact. Not the recruiter. Remember, recruiters do not have different price structures within an agency. They have to follow the set up of their contact.

Let’s take a closer look.

Do Recruiters Charge Job Candidates?

The better question here is if the agency the recruiter works charges candidates. Most of the high-end firms do not do that. It’s more of a process with low end recruiting firms.

I’ve personally never dealt with a company that charged job seekers. I’ve met recruiters, though, who have worked in these “shops” as they call them. And I have met job seekers who unfortunately have had dealings with job agencies that charge them to work.

This sort of thing used to be common, though it has become less common, it’s still prevalent.

The incentive to charge the job seeker is that they are desperate, whereas the company is not. A company will often balk at having to pay a fee (most do) but a desperate job seeker will gladly pay for a role.

Feeding off of that desperation is never a great look. Which is why higher end firms tend to markup the bill rate (on temp hires) or charge a direct hire fee (to the company).

A fair warning though. If you find a “recruiter” off of craiglist or some other suspect source (Facebook , etc…) who wants you to pay them directly. Walk away. They should be making money off of the client. The only situation where you end up compensating the recruiter is when you actually secure work.

Do Recruiters Charge Companies?

Yes. Recruiting agencies will almost always charge companies. If you deal with lower level clients such as factories, restaurants, fast food , single owner retail businesses, then you might find that they will be very reluctant to want to pay.

However, many companies do understand the importance of using staffing agencies and recruiters. And they will not have an objection to paying.

The reason that respectable firms do not mind paying agencies (and recruiters by proxy) is that it saves them a lot of headache. They do not have to worry about:

• FICA
• Workers Comp
• Payroll Expenses
• Onboarding – I9 and other forms
• Dealing with firing people if they don’t work out

Ask a typical recruiter if they’ve ever worked with unskilled level roles (retail workers for non-chain businesses, jewelry stores, landscapers, etc…) then you will hear stories where the company owners refuse to pay. In most cases it’s not worth dealing with these firms. Some of them do not even pay their own staff on the books, hence their reluctance to get involved with legal staffing agencies and legit recruiters.

Why Do Recruiters Charge So Much?

That all depends on what you consider a high cost. Some firms charge a flat fee (the common structure for a direct hire placement). In that situation, the agency will receive 30% of the person’s stating salary. Of that 30%, the recruiter will get a percentage of that 30%. That  number depends on the recruiters salary and compensation structure.

Many people might wonder why recruiters and staffing firms charge this much. Well, it comes down to energy, time, resources, and burden.

Staffing is a difficult job. Many jobseekers are unreliable, they waste your time, they are unqualified, and some simply don’t want to work. For the company, hiring a recruiter and staffing agency saves them endless time and energy bypassing all of the unqualified people who simply can’t or don’t want to work.

And recruiters are not going to do this for free. They need to make money.

Some firms even charge a fee to even begin a search. This is called a retained search. This is helpful because many companies do not have to pay a recruiter or agency until the candidate is placed.

How Much Do Recruiters Charge Employers

The amount of money a recruiter and their agency will charge an employer depends upon many things. The main difference is between direct hires and temporary workers or temp to perm workers.

If a recruiter is placing a candidate at a job as a direct hire they will charge the employer a fee in the manner of a percentage of their salary for the first year.

If the recruiter is placing a person at a company on a temporary or temp to hire basis, then they will charge the company a flat rate per hour.

Temp workers are all billed at different rates depending on the firm the client is working with. The markup that the company uses depends entirely upon what they can negotiate.

Oftentimes companies are willing to accept higher bill rates from firms that can provide the service they need.

For instance, in large markets, some of the gigantic firms have low margins. They might markup only at 45%. However, they also send unreliable candidates and don’t offer great service.

Smaller shops might be able to get away with higher bill rates, especially if their recruiters are more successful at sourcing and placing quality candidates. In these instances it’s not unheard of to hit a 70% markup.

However, that’s more dependent upon the recruiters ability to secure good relationships with their candidates, and then proving that to the client.

The other side to this is that most agencies pay as little as possible to their temporary workers. It’s not unheard of for an administrative assistant to be paid minimum wage in a major city, while the agency owners bill for almost twice that.

How Much Do Recruiters Charge Per Hire

Again, this is more of a decision that the agency makes. If the agency has a contract where they require 30% of the salary, then the recruiter has little recourse to alter that.

If a sales executive working for the agency meets with a client and they bring back a proposal to the back office and partners, then sometimes there is wiggle room. However, unless that recruiter is doing sales (which does happen) a recruiter has no control over the cost of the project.

There is also the case where there can be a reduced fee for the more people hired. For instance, if a recruiter develops a strong relationship with the client (in the case where the recruiter acts as a account manager) then they can bring back requests to the partners.

If you're a person seeking work, steer clear of any agency which wants to charge youo.

If you are a company looking to hire someone, I have the opposite advice. Higher end recruiting firms do not charge people to find work, so you are better suited using an agency with high caliber employees so just bite the bullet and pay them.