Placement fee value in recruitment and the discount habit

3 days ago
3 min read

Updated: 2 days ago

Introduction

Recruitment fees are quoted as a percentage and then negotiated down, usually by the recruiter rather than the client. A standard rate is published, a discount is offered to win the brief, and within a year the discounted figure has become the actual rate for most of the desk.

The arithmetic is unforgiving because the work is the same regardless. Sourcing, screening and managing a process costs the same at a reduced percentage as at the full one, so every point conceded comes directly out of margin rather than out of a cost that scales.

Raising average placement value is therefore mostly about which briefs you accept and how the terms are set, not about filling more roles.

1. Placement fee value in recruitment depends on the briefs you take

Not all instructions are worth working.

Score briefs before accepting them

Salary level, exclusivity, realistic requirements, decision speed, whether they have hired before. A brief failing most of these will consume weeks and fill nothing. Write the criteria down so the decision is not made on optimism.

Walk away from unworkable instructions

A contingent brief shared with four agencies at a reduced rate is a lottery ticket, not a piece of work. The capacity is better spent elsewhere. Declining politely also raises how you are regarded.

2. Charge for exclusivity and retention

The commercial model matters more than the percentage.

Offer a lower rate only for exclusivity

Exclusive briefs justify a different fee because they can actually be worked properly. Concede on rate only in exchange for something. Never discount for nothing in return.

Move suitable work to retained or staged fees

An engagement fee, a shortlist fee and a completion fee spread the risk and commit the client. Senior and specialist roles support this readily. Clients treat a staged process more seriously.

3. Defend the rate with the process, not with argument

Clients discount what looks like a database search.

Show what the work actually involves

Market mapping, approach, screening, reference work, offer management. Clients who see the process defend the fee themselves. Send a one-page summary of your method with the terms.

Never lead with the percentage

Discuss the role, the market and the difficulty first. A rate quoted before any value is established is a rate that will be negotiated.

4. Protect the fee after the placement

Revenue leaks after the invoice as well as before it.

Tighten the rebate and guarantee terms

A generous rebate period on a candidate the client mismanaged is a cost you cannot control. State the conditions precisely.

Invoice on start and chase promptly

Placement fees are frequently the last invoice a client pays. Terms, then follow-up, then escalation, on a schedule.

5. Grow the account rather than the client list

The second and third placement with one client is the profitable one.

Debrief after every placement

A conversation about how the hire is working opens the next brief and costs nothing. Very few agencies do it.

Map the client's wider hiring plan

One vacancy usually sits inside a plan for several. Ask what else is coming in the next six months.

Conclusion

Score every brief before accepting it on salary, exclusivity, realistic requirements and decision speed, and decline the ones that fail — a contingent role shared with four agencies at a discounted rate is a lottery ticket rather than work.

Concede on rate only in exchange for exclusivity, move senior and specialist roles to staged or retained fees, show clients the market mapping and screening work so they defend the fee for you, never lead with the percentage, tighten your rebate terms so you are not carrying the cost of somebody else's management, invoice on start and chase on a schedule, and debrief after every placement because the second brief with an existing client is the profitable one.