QUESTION: I have an excellent client who used my services for three searches last year. We agreed a fee of 25%. They pay me a down payment on the first search. They just informed me they want to use my services for six searches in 2024, with the last one wrapped up by August. This is about $600,000 in total compensation for the six employees that they hire, which could be a lot in fees.

They asked me to send them a proposal. I am considering offering the same agreement we used last year and through this year, 2023, at 25% but also offering an option of them paying me on a retainer, thinking they could pay me one-third down, one-third in April, and one-third in August. How much should I charge? Any suggestions? From Michael Paulson. This is my best client. They run every part of recruiting through me. They are loyal and also fun to work with. I want to treat them right.

Enhancing Client Relationships and Trust in Recruitment

A great question. A couple of key things in there. You have got a pretty good fee. You have got a deposit. They are used to those terms of business. I would not compromise, nor would I make them a proposal yet – yet. A proposal is them interpreting what you are writing.

What I would do, whether this is an individual or a couple of individuals, I would express my gratitude. I was thinking about it, and before I make a proposal, I would really like to dial into what exactly you want to get done, and I know it is filling the openings.

Then, you go into a deeper diagnostic of the problems, whether they have identified the 6 roles, and the consequences of not filling them. You need to know the level of urgency to ensure you have the appropriate resources to do the job.

Leveraging Successful Recruiting Experiences for Better Negotiations

I was truly blessed. I had a client, my best client – maybe not even our best client, but one client, one year in revenue best ever was about $800,000. They called us up and said we’re giving you almost $1 million, Mike; what can you do for us? There was another account manager. It was actually his account. I was helping him. They loved him. Everything that you wrote about here, they loved him. They used him. They ran everything by him. I’m like, they are not going anywhere.

Here is what I promise you, because you said one thing, just a quick sidebar, I wanted to treat them right. I love that, but remember, the first sign of a recession, they are going to ask you to cut your fee, they are going to not want to pay retainers, maybe they will not, but I have just found they are not going to necessarily do right by you. I just want to make sure – I am not ever trying to screw anyone over – that I provide tremendous value for what I charge. Just keep that in mind.

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Practical Retainer Strategies for Recruiting Services

Back to your proposal idea and this concept. What we had done was charge, I think, a $7,000 retainer on every position. Very similar questions. Would we cut his fee? All these different options. What we said was, you know what, we have charged you $7,000 per position upfront. What we are willing to do, and we did this on a phone call; by the way, what we are willing to do is when you give us a project, we will only charge you a retainer on half the project. A lot of times they would give us 3 or 4 openings at a time.

Here is what we are going to do: if you give us five openings – or six openings so I can do the math – we are going to charge you a retainer on 3, so $7,000 each. We are going to invoice you for $21,000 and then we will take the $7,000 off the last 3. For the first 3 placements, we are going to bill you – I think we were charging 30% – we are going to charge you 30%. You will pay us the fee. On positions 4, 5, and 6, we will pay you the fee less the $7,000.

Here was his response. I will never forget:

Oh my gosh, you will do that for me? We did not save them a dime other than the interest on the retainers. The reason I did that was on the last position if they were ever going to fill a position internally, we only got paid the balance if we filled the job. If they had an employee referral, we just kept the retainer. It is not tied to an individual position. It is tied to the project. That is all they needed.

When they are coming back asking for something, you want to give them something. But it does not mean you have to cut your fees. I know you charge them a retainer. Maybe you can charge them a retainer on half the position or another possibility. This is a really good one here if you know them. You know that pretty much every opening they give you, they are going to fill.

I had a concept I called a reverse retainer, meaning I charged you nothing upfront. We did all the work that you are used to, Mr. Client, and if you cancel the position or fill it through alternate means, you pay us $7,000 for a consulting fee. That might help them eliminate the upfront money, and that is a give when they are really looking for something.

But I would really go into them, and about the diagnostics, and at the very front end, resell what you did for them and feel out, without being too obvious – are they bringing in a bunch of recruiters? Are they going to risk the ebb and flow that you gave them, timely recruiting, great talent, to save a few percentage points?

A lot of that question. It was a phenomenal question. Thank you.

P.S. Whenever you’re ready… here are 4 ways I can help you grow your recruitment business:

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