How much will a recruiter cost my company?
Almost all recruiting websites have one thing in common: they are conspicuously silent when it comes to pricing.
We’re no different. Until now, we’ve never shared what you as a client should expect to pay. In the past we’ve been guilty of the same manipulations as other agencies – offering prolonged sales pitches and only very broad estimates.
But we’ve come to see the light. Sales pitches are clearly not what you want, so why pretend? What you want is simple – an answer to your question. That’s what you’ll find here.
What you can expect to pay
Think of your most recent hire – was the person easy to find? Probably not. That’s because unemployment has held steady at a 50-year historic low for most of 2018 and 2019. Granted, 2020 was a mess – but so far 2021 is looking more competitive than ever. Once again, job seekers have all the power and they’re exerting it to leverage better salaries, benefits, and bonuses.
That’s what we both – you as a hiring manager and us as recruiters – are up against. And that’s what is determining and driving recruiter prices; the free labor market. Supply and demand.
Based on what we’ve seen in the market, how other recruiting firms are charging, and the difficulty of placements in today’s economy, most agencies offer something similar to this general pricing structure:
Low unemployment means that most people are not motivated to take on contract work. To entice such workers, you’ll need to offer competitive pay.
For junior positions, expect to pay $30-$55 per hour.
For mid-level skilled positions, expect to pay around $55-$100 per hour.
For senior positions, expect a bill rate of $100+ per hour.
This cost represents the TOTAL amount you would pay a recruiting firm, out of which the firm subtracts all other costs (the contractor’s hourly pay, payroll taxes, healthcare, 401k, recruiter commissions, etc.).
Again, think back to your most recent hire. Where did they land on the ‘difficulty to place’ spectrum? Did they require extensive certifications, knowledge of uncommon systems, or software specializations? The complexity of the role and its requirements will determine where you fall within the following brackets:
For entry to mid-level positions, expect to pay a one-time fee of 20% – 25% of annual salary
For high-level positions, expect to pay a one-time fee of 25% – 33% of annual salary
What factors determine the cost of recruiting?
We’ll preface this by saying that there is no one answer to ‘how much will a recruiter cost?’. That being said, we will do our best to give you a better understanding of what recruiting services may cost your company based on a few key factors:
- The tightness of the labor market: The lower the unemployment rate, the harder it is to find qualified job seekers. The people that are willing to leave their current jobs have high expectations when it comes to salary and benefits.
- The required certifications and level of experience: Are you looking for a CPA of 10+ years with progressive Big4 audit experience? The more specific your needs, the more difficult it’ll be to find the right match.
- The required systems and software(s): Say you want a hyper-skilled Android Developer with knowledge of multiple uncommon coding languages and leadership experience. This type of search won’t surface a good candidate immediately; we’ll have to call on our network, investigate leads, and likely convince a well-compensated developer to leave their current comfortable position.
- The number of people engaged in your industry/position type: How many people in your city are actually qualified – and wanting – to do this job?
All of these factors can be grouped under ‘difficulty of the placement’ – the more peculiar, niche, or specific your needs, the harder it will be for us to find you a worthy candidate. These searches will therefore cost more than, say, an entry-level position with basic qualifications.
What to consider when deciding to work with a recruiter: ROI and more
No one would ask a Software Engineer to design a marketing strategy – that’s not their job. The same logic should be applied to hiring; unless you’re a recruiter, hiring is not your job and you probably aren’t the best person to do it.
Specialization: Recruiters don’t deal with other aspects of HR or have another full-time job to worry about. We devote all of our time and energy to surfacing and engaging hard-to-find candidates.
Knowledge of candidate pool: When a recruiter sources for your AP Specialist role, they aren’t just vetting and comparing 10-20 candidates. They’re comparing these candidates to hundreds, sometimes thousands of other people with similar experience and skills that they’ve interviewed over the past years. The person you may think is a great fit – having interviewed 5 such people – may actually be pretty weak when compared to 1000 similar profiles. It’s impossible for your internal HR department to have this intimate experience-based knowledge of successful candidates.
Market insight: Recruiters know competitive salary ranges, which companies are the best source of candidates, what red flags you might have missed, etc. You don’t have time to research all this – you have your own job to worry about.
We know why you want to go at it alone – not only do you know your department better than anyone else, but you’ll likely be this person’s direct manager. And engaging a recruiting agency will cut into your hiring budget unnecessarily. Or will it?
Working with a recruiter vs. hiring on your own
Consider this: when you try to hire on your own, you divert attention and energy away from your actual job and towards something at which you are not particularly skilled – hiring. In doing so, you cost yourself time – you’ll need to source professionals, pre-screen top candidates, schedule interviews, and call references – and you place an undue burden on your existing staff.
The process will probably take you more time and you won’t have the full story when it comes to competitive salaries and best practices. This means you’re more likely to extend an offer that is rejected, and have to either engage in a stressful negotiation process or lose your favorite candidate.
And that’s all assuming you’ve made the right choice in the first place. If you hire someone who is a bad fit, you cost yourself a lot more than that initial time and commitment. You threaten to destabilize your team, damper office morale, waste precious time onboarding a flawed professional, and lose significant money in the process.
Of course, there are risks with a recruiter as well. But you can be confident in the fact that this is not the first such candidate that the agency has placed – they are comparing that professional to countless others. You also won’t be responsible for the burden of benefits, unemployment, or disability for a contract worker, and you’ll feel secure with a 90-day prorated guarantee for permanent employees.
Should you work with a recruiter?
Yes! Thanks for asking. Glad we sorted that out – you can reach us at firstname.lastname@example.org.
But really – only you and your company can make that decision. Not every position requires a recruiter; if you’re looking for entry-level professionals with a relaxed hiring timeline, you may be better off working on it alone. Weigh the pros and cons, seek outside advice, and reach out to learn more about working with us.