What is recruitment fee and how it works

What are the most common recruitment agency fee models?

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In general, recruitment agencies use one of the four pay-for-hiring models:

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Hourly Billed Recruiting

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With this pay calculation model, the recruitment fee is not tied to the type or level of the vacancy. It is based on the total number of working hours spent by the recruiting team working on this hiring project.

At the same time, advertising, candidates’ test evaluation, etc., are estimated separately. As a rule, under this model, the guarantee of the candidate’s replacement is not provided and is not included in the payment.

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Retained Search

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Using this payment model, the recruiting agency charges a percentage of the successful candidate’s annual salary as their placement fee. The payment is performed in three stages, in three installments, while the first two payments are not refundable and make up two-thirds of the total fixed fee.

Inclusion in the payment of advertising costs, candidates’ testing, etc., is negotiated separately.

Salary Percentage

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The recruitment agency charges a percentage of the candidate's salary per year as their placement fee. Plus, this percentage is added to the superannuation component. The average percentage in the IT area is 20-30%.

By this model, the recruitment fee may sometimes include advertising costs, candidates’ testing, etc., and a ninety-day placement guarantee.

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Flat Fee or Fixed Fee Recruitment

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Following this payment model, the client and the contractor agree on a fixed fee. In this case, the fee is usually less than the one tied to the candidate’s annual salary.

When using this model, it usually goes about an exclusive agreement. Besides, advertising costs, candidates’ testing, etc., can be estimated separately.

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The OnHires payment model

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OnHires provides its clients with pay-per-hire recruiting based on the Salary Percentage model. With this model, the agency receives a percentage of the candidate’s annual salary. The amount of share depends on the position and its level.

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Besides, OnHires offers subscription-based full-cycle recruiting based on the Fixed Fee Recruitment model. The fee depends on a quantity of positions to fill in during an agreed period as well as the number of the personal recruiters who will work on your project all the time. It’s the cost-efficient solution for big companies and companies that need to hire at a large scale. 

According to the inclusive agreement, our agency can also supply the client with a wide range of services, including closing positions, leading a team of recruiters, or running a full-scale recruitment department in your company. Additionally, there is an opportunity to integrate special HR software, set up recruiting processes, and staff onboarding and offboarding. Providing such additional services, we have a few fixed tariff plans.

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The Conclusion

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There are various payment methods, and each company chooses the one that suits them best. I would recommend that you familiarize yourself with the model OnHires uses, which has proven itself very well.

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