Last Updated January 29, 2025
It’s tricky for any business to strike the right balance between rates and pricing. If you price too high, potential customers will leave, and if you price too low, you might not be in business for long. Setting and negotiating staffing agency rates is part of running a successful agency. But this is about more than determining staffing agency bill rates—you need to ensure that your pricing reflects the quality of your services.
In this guide, we’ll explain how staffing agency rates work and share typical staffing agency rates. We’ll also provide 11 helpful steps for negotiating fair staffing agency rates that balance client needs with profitability.
How Staffing Agency Rates Work
The main responsibility of a staffing agency is to identify and source quality candidates before matching them with clients’ open job listings. However, most businesses won’t pay for interviews. This is largely a commission-based job where companies pay for results. In other words, you only get paid when your client makes a hire.
Most staffing agency arrangements pay based on a percentage of the employee’s first-year salary. So, if the client agrees to pay 20% of a $50,000 annual salary, your agency gets $10,000 for that successful hire. The average going rate for most staffing agencies is 15 to 25% of an employee’s salary.
Since everything is percentage-based, it makes sense that staffing agencies want to hire for higher-ranking jobs with bigger salaries. However, keep in mind that it takes way more work to source quality candidates for high-profile positions. It can be just as lucrative to source entry-level jobs, provided you have enough volume and clients.
Typical Staffing Agency Rates
Most staffing agencies make money by charging a flat percentage fee, but many factors determine employment agency charge rates. Understanding standard charges—including what your competitors charge—will help you choose competitive staffing agency bill rates that keep you profitable.
On average, staffing agency bill rates can range from 10% to 50% of the employee’s expected wage. Recruitment agency commission rates vary widely because of several factors:
- Markups: Every business charges markups, which cover overhead expenses like rent and workers’ compensation insurance or other employee benefits. At a minimum, your pricing needs to cover your staffing agency markup rates to keep the lights on.
- Base pay: The higher an employee’s expected salary, the more your staffing agency will make. It might sound like you should only pursue high-paying job listings, but these can be notoriously difficult to fill, so don’t let base pay influence your decisions too much.
- Specialty jobs: Hiring for specialized jobs in healthcare, IT, legal, and other complex industries requires more careful hiring practices. As a result, these technical fields usually fetch higher employment agency commission rates.
How to Negotiate Staffing Agency Rates
Staffing agency bill rates require a surprising amount of nuance. Applying a flat percentage rate fee to all clients doesn’t make sense, especially if they’re in specialized industries. Follow these 11 tips to effectively sell your staffing services with competitive rates tailored to your clients’ needs.
1. Get to Know Your Client, Their Budget, and Their Hiring Needs
Sourcing irrelevant or low-quality candidates is a cardinal sin of recruitment. Before you do anything, understand your client’s business model, budget, and who they need in the role. Not only will that improve the quality of your hires, but this research also helps you fine-tune your staffing agency rates.
No business is one-size-fits-all. For example, you can negotiate higher rates if you’re helping a client hire for one niche role. But if you’re working with a different client who needs lots of entry-level positions filled in bulk, you should offer lower rates because of the volume of work.
2. Determine Costs for Screening, Vetting, and Evaluating Candidates for Each Position
Candidate sourcing can be time-consuming and costly. The more complex the role, the more time you’ll likely have to spend weeding out irrelevant candidates and finding a good fit for your client’s role. For example, technical positions require more high-level candidate skill assessments and background checks.
Fortunately, you don’t have to eat these costs. Calculate the estimated costs of sourcing a candidate before providing a client with your employment agency charge rates.
3. Gauge Unique Factors That May Affect Bill Rate
Certain roles have inherent risks that require you to charge higher staffing agency bill rates. For example, you might want to charge more if you’re hiring for a role that could lead to injury or that has a high chance of workers’ comp rates. There’s an increased risk of liability when you hire for these positions, so charging more can help offset the higher cost of insuring your business.
4. Take Employee Benefits Into Consideration
You likely aren’t running an employment agency on your own. Employees are essential to running your business, but they also increase your business costs. It’s important to consider the cost of staffing agency employee salaries and benefits. Factor in costs like health insurance, retirement, and time off into your pricing structure. This step ensures you can still provide for your employees without hurting the business.
5. Have a Target Minimum Rate Going Into Negotiations
Know your baseline price before negotiating with a client. The staffing agency pay rate minimum should account for operating costs, overhead, and the cost of candidate screening. If the client’s budget is below this minimum, you may need to turn down the project so you don’t compromise your bottom line.
6. Ask About Their Experience Working With Agencies
Some businesses have never worked with a staffing agency before. There’s nothing wrong with that, but it likely means the client needs more hand-holding and touchpoints than a client who has previously worked with agencies. You may want to build this additional time and effort into your rate.
If the client has worked with an agency before, asking them about their experience gives you insight into appropriate pricing and how they prefer to work. Ask about what worked well and what didn’t in their previous staffing agency client agreements. This information can help you position your staffing agency rates, employment agency charge rates, and overall services in a way that addresses their specific needs and builds trust.
7. Highlight Your Agency’s Expertise
It’s only natural that your clients will try to reduce your staffing agency rates. However, you’re a professional who brings value to the table. Showcase your track record of successful placements, deep understanding of industry trends, and ability to meet complex hiring needs. Clients are often willing to pay higher staffing agency rates when they understand your agency’s expertise.
8. Explain Your Recruiting Process
What’s your unique process for talent pool management? Be transparent about your recruiting process to build trust with clients. This is a must for deepening client relationships, but it’s also essential for justifying your staffing agency rates. Break down each step, from sourcing candidates to screening, vetting, and onboarding. Highlight the tools, methodologies, and expertise your team uses to ensure top-quality placements. Good clients are willing to pay higher employment agency charge rates for more rigorous and accurate evaluations.
9. Be Flexible, But Firm
You don’t have to strongarm clients into agreeing to a set staffing agency rate. Every role is different, so it’s crucial to be as flexible as possible with your clients. Be open to customizing your rate, but ensure that the agreement still keeps you profitable.
10. Have a Best Alternative to a Negotiated Agreement (BATNA)
A best alternative to a negotiated agreement (BATNA) is essentially a backup plan for when negotiations fall through. A well-defined BATNA ensures you’re negotiating from a position of strength, not desperation. Having a fallback plan is a best practice for staffing agencies because it allows you to confidently walk away from staffing agency client agreements that don’t meet your needs.
11. Consider the Importance of Your Client’s Job Order for Your Agency
What happens if a client is pushing for lower staffing agency rates, but you still want their business? Ultimately, it comes down to whether the project benefits the agency in other ways.
For example, if securing this client opens the doors to other opportunities, accepting lower staffing agency bill rates could be a strategic move. Or, you might be willing to take lower-paying jobs right now if you’re in desperate need of new business. Always weigh the potential benefits against taking lower rates to make a decision that’s best for your agency’s long-term success.
In-Summary: Negotiating Rates for Your Staffing Agency
Staffing agencies fill a tremendous need by helping job seekers and hiring businesses connect with each other. This job isn’t easy, though, which is why staffing agencies need to charge what they’re worth.
Consider factors like your operating costs, the complexity of the jobs you’re hiring for, the client’s expectations, and your unique skills to find the right commission structure for your services. Ultimately, successful negotiations hinge on preparation—knowing your costs, defining your minimums, and understanding the importance of each client to your business. With these strategies, you can confidently navigate negotiations and foster profitable, long-term partnerships for your staffing agency.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
