recruitment costs

Recruitment Costs – Hiring an HR Professional Through a Recruitment Agency

A Comprehensive Guide to Our Fees and Pricing.

Your business has identified the need to hire an HR professional and you want to understand what recruitment costs will be involved if you use a recruitment agency.

You’re probably wondering what fees you’ll be charged, when you’ll have to pay them and if you are being quoted a reasonable price for the services you’re buying?

Maybe you’re also considering doing it yourself and want to know whether the DIY approach would work best for you at this point?

You’re weighing up all your options. We like your thinking.

Whilst doing your research, you might have noticed that a lot of recruitment agencies don’t talk about their price openly online.

We also used to fall into this camp until we realised how frustrating it is as a consumer not to be able to find out how much something costs when you’re making a buying decision.

It’s the equivalent of looking at a restaurant’s menu before booking a table and realising they haven’t included prices…

It’s an instant red flag! 

You immediately assume they’re going to be mega expensive and in a lot of cases decide not to book a table.

In this article we provide honest answers to all the questions you might have around the price of our permanent HR recruitment offering. We hope it helps you make a more informed buying decision.

What's Included:

There’s a lot to cover here, so we’ve linked some of the key areas you might want to skip ahead to:

1. How much do recruitment agencies charge on average?

Recruitment agency fees can vary widely depending on a number of factors, such as the location, industry, and the type of positions being filled. However, on average for permanent hires, recruitment agencies charge between 15% to 30% of the candidate’s first-year salary as their fee for successfully placing a candidate with a client.

If you’re asking why a recruitment agency charges a percentage of salary – it’s a great question which we answer later on in this article. Recruitment Costs

2. What does PEEQ charge for making a permanent HR hire?

PEEQ has three distinctive permanent recruitment packages that range from 20%-28% of a candidate’s first-year salary.

We’ve outlined our pricing guide below to give full transparency of the benefits and services offered at each level. 

Option 1 – IDENTIFY – 20% Fee

2 MONTH PLACEMENT GUARANTEE – A free replacement if your hire leaves within 2 months

  • Protected by specialist Recruitment Insurance
  • In person or video job briefing
  • Advertise on leading job boards
  • Access to reputable CV databases
  • Access to Peeq’s HR talent pool
  • Up to 25 LinkedIn headhunting approaches
  • 100% of candidates fed back to
  • Dedicated and specialist HR recruiter.
Option 2 – ENHANCE – 22.5% Fee

3 MONTH PLACEMENT GUARANTEE – A free replacement if your hire leaves within 3 months.

Everything from IDENTIFY plus…

  • Job Description consultation and design
  • Candidate video shortlist submission
  • Advertising on additional specialist job boards
  • Up to 50 LinkedIn headhunting approaches
  • Out of hours point of contact.
Option 3 – ELEVATE – 28% Fee

6 MONTH PLACEMENT GUARANTEE – A free replacement if your hire leaves within 6 months.

Everything from ENHANCE plus…

  • Custom webpage creation to promote your role and attract the best talent
  • Unlimited LinkedIn headhunting approaches
  • Weekly progress report
  • Psychometric testing and insight reports
  • x2 Exec Coaching sessions with an accredited business coach for your new hire
  • ‘Priority Pass’ – skip to the front of the queue!

Additionally, we have created a simple price calculator that allows you to input your hire’s annual salary, in order to generate an accurate price for each of our services.

Give it a try using the button above! Recruitment Costs

3. Do you ever discount your recruitment fees?

Yes, we offer discounts depending on a number of factors.

Firstly, we provide a 10% discount for any client who engages us on a retained basis for any of our packages.

What does this mean?

It means that instead of paying the full fee at the point your hire commences employment, you pay part of the fee to engage our services at the start of the process (⅓ of the total fee).

The final ⅔ of the fee (the balance) is due when that person joins your business.

Before we explore why you might choose to do that, let’s look at the numbers… 

If you were hiring an HR Manager on a £60,000 basic annual salary and had chosen our IDENTIFY package. The standard fee would be £12,000 +VAT for making this hire. 

However, if you retained us, and therefore received our 10% discount, we would reduce your total fee to £10,800 +VAT (broken down as follows…)

  • £3,600 +VAT up front
  • £7,200 +VAT when your hire starts 

That’s a £1,200 +VAT saving 

You can try this for yourself by visiting our Pricing Page and using our fee-calculator to see our prices and the associated discounts.

So, other than the obvious discount we reference above, what are the additional benefits of retaining us to make your hire?  

What would motivate you to pay an upfront fee to engage our services? 

Well, put simply, we literally own the problem and will therefore move heaven and earth to find you someone fantastic for your business. 

It becomes our TOP priority and massively stacks the odds in your favour. Investing in this partnership approach means we are VERY committed to getting a successful outcome. 

If you’re really serious about making this hire, then why wouldn’t you give yourself the best shot of finding ‘the one’?

So aside from retaining us, are there any other circumstances where a discount might be applicable?

Yes, there are. Recruitment Costs

For instance, we offer preferential rates to our clients who want to make multiple hires, and for businesses who want a bespoke package that includes some of our listed services, and not others.

These fees are best discussed on a case by case basis as there’s a number of factors which contribute to a reasonable price:

  • Number of potential hires
  • Size of the hiring company
  • Complexity of the role(s) being recruited
  • Availability of talent
  • Services you want us to include in a bespoke package vs. the ones you don’t need.

4. Why do you charge a percentage of annual salary rather than a fixed fee?

On paper, it might seem like we’re offering exactly the same recruitment service for an entirely different price. 

We hear where you’re coming from, as the actual process is basically the same…

However, there are two key reasons why recruitment agencies base their fees on annual salary as opposed to a fixed recruitment fee.

The first is because of the volume of suitable candidates. The higher the salary, the smaller the talent pool. This means that agencies have to work harder to find the best candidates for your role and use more innovative tactics to grasp the attention of passive, senior candidates.

It’s very similar in this regard to the Estate Agency market. On face value, being instructed to sell a property worth £1,500,000 is awesome; the fee is of course going to be much bigger than a house worth £325,000. BUT as the value of the property goes up, the number of people who can afford it goes down, making it a smaller pool to fish in.

In a hierarchical job market the pyramid of talent decreases as the salary increases.

Secondly, it requires a different skill-set to recruit senior level professionals. There’s a specific type of experience needed by recruiters to qualify and assess senior level candidates, and engage them in a process. You’re essentially paying a premium for the recruiters’ expertise and ability to represent your brand credibly with prospective candidates.

5. When do I have to pay for your recruitment services?

When making a permanent HR hire through PEEQ, there’s two variables that will dictate when you have to pay for our services.

Firstly, if you engage us on a ‘contingent’ basis (no win no fee), you won’t be invoiced for our services until the successful candidate’s first day. Our payment terms are 14 days. In the unlikely event that no candidate is appointed, no fee will be due. 

Secondly, if you engage us on a ‘retained’ basis, there will be two points in our process when a fee is due. 

In the first instance, you will be invoiced a ⅓ of the total fee (based on the candidate’s estimated salary) which is due as soon as the work commences (following a full brief). 

Finally, you will be invoiced the balance (the remaining ⅔ of the total fee) on the successful candidate’s first day (taking into account the candidate’s actual salary).

6. Do I get my money back if the person leaves?

Traditionally, most recruitment agencies offer a ‘rebate period’ to outline what happens in the event that a candidate you’ve hired through them leaves your business.   

This rebate period details specific timeframes during which you, the client, may be entitled to a partial or full refund on recruitment fees paid to the agency. 

Typically, the length of the rebate period may vary depending on the agency and the terms of the contract. Generally, rebate periods range from 30 to 90 days on a sliding scale basis, but they can be longer or shorter depending on the agreement between the agency and the client. 

When working with PEEQ, we use slightly different terminology to describe our approach to rebates / refunds. We refer to our placement guarantees for the different recruitment packages we offer.

Option 1 – IDENTIFY 

2 MONTH PLACEMENT GUARANTEE – A free replacement if your hire leaves within 2 months

Option 2 – ENHANCE 

3 MONTH PLACEMENT GUARANTEE – A free replacement if your hire leaves within 3 months

Option 3 – ELEVATE 

6 MONTH PLACEMENT GUARANTEE – A free replacement if your hire leaves within 6 months

You’ll notice from the options above that the package you choose impacts the length of the guarantee we offer. With our Elevate package, we offer a free replacement if your hire leaves within 6 months. This is because it’s our most comprehensive recruitment package and therefore the likelihood of a ‘mis-hire’ occurring is significantly reduced.

For instance the post-placement Executive Coaching offered as part of this package makes a fundamental difference to your hire’s ability to ‘bed-in’ effectively, thus reducing the risk of that person leaving prematurely.

7. Can I buy certain parts of your recruitment packages and not others?

Absolutely. This is one of the key reasons we have created three different packages with three different price points. We are conscious that there might be certain services that you want removed or added.

We want to supply a service that you actually need and feel good about buying. If that means swapping, adding or removing certain parts, and as a result adjusting the fee, then we’d be very happy to create a unique proposal for you.

8. I want to make multiple hires, will you do me a preferential rate?

As discussed earlier, there are three key instances when we offer clients a preferential rate. 

  1. If we’re being retained to make the hire (we reduce the total fee by 10% of our IDENTIFY and ENHANCE packages)
  2. If we’re quoting for a bespoke solution that doesn’t include all the ‘standard’ services listed for that package (see section above)
  3. If we’re being engaged by the same client to make multiple hires.

The exact fee can only be calculated on a case by case basis as there’s a number of factors which contribute to determining a reasonable price:

  • Number of potential hires
  • Size of the hiring company
  • Complexity of the role(s) being recruited
  • Availability of talent

For more information on this service, click here to read a case study on the multi-hire recruitment solution we delivered for the marketing consultancy, Ebiquity.

9. Will I have to haggle with you?

You’ll notice from our pricing table that we are as transparent as possible when it comes to disclosing our recruitment costs and fees. 

We do this to be totally up front from the outset (if you are like us, then you’ll know how annoying it is when companies don’t disclose their prices!). 

However, another driver is to keep meaningless haggling to a minimum and to evidence to our clients exactly what they get for their money.

However, if there’s something you want us to remove from one of our packages, then we’re open to adjusting the fee accordingly.

10. Is it cheaper for me to make this hire myself?

This is one of the key questions that many businesses ask themselves before deciding to use a recruitment agency. 

But before we look at whether it’s cheaper, we have to look at whether you’re actually in a position to make the hire yourself.

Firstly do you have the time, bandwidth and resources to give this key task the attention it deserves. Secondly, hiring a niche HR professional necessitates having access to strong candidate networks and the relevant experience to run a recruitment process alongside your day job. 

What’s more, are you crystal clear on exactly the type of person you’re looking to hire and do you feel confident assessing potential candidates against this criteria? In short, have you got context to what ‘good’ actually looks like?

This is what you’re buying when you engage a specialist recruitment agency. 

If it’s a resounding yes to all of the above, then you should absolutely make this hire yourself. It sounds like you have all the necessary expertise, tools and mechanics in place to find someone fantastic.

And, depending on the value you put on your time and the combined costs of marketing your job to prospective candidates, then it’s highly likely that it WILL be cheaper to take the ‘DIY’ approach. 

However, if you think you’re biting off more than you can chew, then it might be more cost effective to use an agency.

Specialist agencies in particular have access to a wider pool of qualified talent and are highly skilled in sourcing and screening top-quality candidates. 

Ultimately, the decision to use a recruitment agency or not will depend on a variety of factors, including the role, the level of expertise required, and the resources available to your company.

We are always happy to give market advice before you ultimately decide what to do. Contact us here for a virtual coffee and chat about your hiring needs.

11. I’ve already started recruiting for this role, but I’m not sure if I’ve got the best talent. Will you still work with me?

It’s not uncommon for a business to start recruiting for a position themselves, before questioning whether they’re seeing the best available talent..

Perhaps the candidates you have in process aren’t diverse, or maybe you’re just not receiving enough applications. Either way something’s telling you that your recruitment efforts need a boost.

In this scenario, we’re of course happy to help and use our experience to help maximise your chances of filling the role.

We will, however, ask for something in return. The opportunity to work with you exclusively and, ideally, on a retained basis to ensure we get to success ASAP. 

Working with a recruitment agency on an exclusive basis increases your chances of filling the role – simple. 

Read point 12 (below) for more information on why this is the case.

As part of our exclusive agreement, we will work closely with you to understand:

  • What skills and experiences does your ideal candidate need to have?
  • What makes your business a special place to work?
  • What recruitment activities have been undertaken to date?
  • What challenges have you faced with hiring this role?
  • What push back (if any) have you received from candidates in reference to this hire?
  • What does success look like for this role?

Once we have a firm grasp of the questions above, we’ll be in a strong position to find you someone great for your role.

12. I want to use more than one agency to make this hire. Will you still work with me?

Unfortunately, whilst well intentioned, instructing four recruitment agencies at once ultimately means each gives 25% effort, simply because agencies will prioritise clients that prioritise a partnership.

This multi-agency approach will elongate the process, negatively impact candidate experience and drive the wrong behaviours from all involved parties. 

When you choose to work with a single agency, they will choose to dedicate more time and resources to your hiring needs. 

This leads to a more thorough and effective search process, resulting in a higher likelihood of finding the right candidate for the job.

For us, it’s important that we’re not in a race to ‘throw’ CVs at you before our competitors. This ‘bun-fight’ approach devalues our service and reduces the likelihood of making a successful hire.

Do yourself a favour and choose one agency. 

The agency that gives you the most confidence that they’re going to be able to help you.

The agency who you build the best rapport with.

The agency that you trust.

13. Are your fees different when making a contract hire?

Yes. Unlike permanent HR recruitment where an agency’s fees are calculated as a percentage of the candidate’s annual salary, the fee for hiring a contractor is calculated as a percentage of the candidate’s hourly / daily rate, OR as an agreed fixed fee per hour / day.

At PEEQ, we only work with HR candidates on a day-rate basis, so we agree on a total daily budget with our client before committing to recruit.

To illustrate how much this might cost, let’s look at the scenario below:

Client.Co expresses the need to hire a day-rate contractor for a three month period. 

The first thing we need to understand is Client.Co’s budget for hiring this contractor. We start by looking at this budget on a per day basis, which includes the contractor’s pay and our fee – known as the ‘total charge’ rate.

Let’s say that Client.Co had a £450 daily budget, here’s how the fees might be broken down…

PEEQ’s fee = £50* per day +VAT
Contractor’s pay = £400 per day +VAT
Total cost / charge rate for Client.Co = £450 +VAT

* NB: This fee sits at the lower end of our pricing spectrum, and in a real scenario would take into consideration the seniority of the hire and level of difficulty with sourcing the candidate.

Assuming that the contractor works for 20 days a month, for the duration of the three month assignment, you could expect to pay £9,000 +VAT per month to secure the contractor (£27,000 +VAT for the full assignment).

That’s the total cost to Client.Co. No hidden fees or add-ons.

Billing for these services happens a month in arrears to allow the contractor to submit the days they actually worked the previous month. An invoice is then generated and sent to the client based upon the total number of days worked.

What value do I get from paying your fee?

PEEQ’s fee covers the cost of sourcing the contractor, relevant insurances, an IR35 compliance check, administrating the paperwork and legals, and managing the contractor’s payroll for the duration of the assignment.

Selecting the right recruitment agency for you 

There’s over 39,000 recruitment agencies in the UK, so it’s important you choose the one that best fits your needs. Ultimately, like any buying decision, it comes down to who you feel comfortable trusting with making that key hire for your business.

This decision will be impacted by whether it’s a specialist hire (e.g. HR vs Marketing vs Finance vs Sales), how senior it is, how competitive the candidate market is and where the job is based.

Although the latter is arguably less relevant in today’s hybrid work world – much of our recruitment activities are conducted virtually, so an agency’s location isn’t as important as it once was.

But, what’s clear is there’s plenty of choice. So we recommend you do your research before making a decision.

Some recruitment agencies will be cheaper than us and some will be more expensive. 

But at least you now have a solid understanding of what you could expect to pay when hiring a permanent HR professional through a specialist agency. And, what you’d actually get for your money.

To help you weigh up your options around choosing a recruitment agency, we’ve prepared a guide that should make this decision easier.

And if you have any questions or want to speak to us in the meantime, please drop us a note via the contact form below.

Get in Touch with PEEQ HR Recruitment

We are here to help you. If you have any questions, queries or would like to discuss a potential hire, a job application, Recruitment Costs, or require clarification on anything detailed on our website, then we would love to hear from you.

Please feel free to call, email or complete the form provided and we will assist you.

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