A placement fee is the amount a client owes a recruiting or search firm when a defined hiring or placement event occurs under their agreement. It compensates the firm for finding, assessing, introducing, and supporting the successful hire.<\/p>\n
The fee may be a fixed amount or a percentage of an agreed compensation base, such as starting salary, first-year base pay, or total first-year cash compensation. The contract should state the calculation, trigger, invoice date, payment deadline, tax treatment, ownership period, replacement or rebate terms, and treatment of later hires or compensation changes.<\/p>\n
In contingency recruitment, the placement fee is commonly earned after a candidate is hired or starts, according to the agreement. A retained search may use staged fees tied to project milestones, with a final amount reconciled against actual compensation. Contract and temporary staffing use different economics, such as a margin on hours worked, though a separate conversion fee may apply when a contractor becomes a permanent employee. Recruiterflow’s help documentation<\/a> defines contingent jobs as placements where the firm is paid after a successful placement.<\/p>\n The firm and client first agree whether the assignment is contingent, retained, engaged, exclusive, project-based, or another model. The commercial model determines when fees are earned and whether part of the fee is payable before a placement.<\/p>\n For a percentage fee, the agreement must define compensation precisely. It might include base salary alone, fixed cash, expected first-year cash, allowances, signing payments, or another measure. State how bonuses, equity, commission, currency conversion, part-time work, and salary changes are handled.<\/p>\n Record the percentage or flat fee, minimum charge, volume discount, role-specific rate, exclusivity adjustment, and applicable taxes. Recruiterflow’s fee-negotiation guide notes that a flat fee can give both parties clearer budget visibility.<\/p>\n The trigger might be signed acceptance, employment start, completion of a milestone, or another event. Avoid relying on the word “placement” without defining it. The trigger affects invoicing, revenue recognition, forecasts, and disputes.<\/p>\n<\/span>Placement fee at a glance<\/span><\/h2>\n
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<\/span>How a placement fee works<\/span><\/h2>\n
Agree the commercial model<\/h3>\n
Define the fee base<\/h3>\n
Set the rate or fixed amount<\/h3>\n
Define the earning trigger<\/h3>\n
Invoice and collect<\/h3>\n