My observation of most negotiated fees in our industry is that they are 25%, 30%, 20%, and I even see some dropping there pants to 15% (shame on you!). What happened to 28? 24%, 27.5%?.
When we drop by five percentage points we are discounting our fees from 17% to 25% depending on where we are starting from. Here is a typical conversation… Recruiter: “Our fee represents an investment of 30% of first years base salary”. Prospect: “We only pay 20%”. Recruiter: “Can we meet in the middle at 25%?”
First, the prospect requested a 33% cut, NOT 10 percent, the recruiter then capitulated by offering a 17% discount NOT 5 percent.
Here’s a strategy we use that has helped us tremendously, even in the current economic environment. We quote 28.75% at the opening, not 30%. Why? It completely catches your prospect off guard. They are silently perplexed and wondering how in heck we came up with that number. Most don’t ask, for those that do we respond, “we have studied how much our search firm needs to invest to do this successfully and how much time and effort along with the degree of difficulty. We combine this with a fair profit margin and came to this fee.”
Do we have to negotiate that number. Yes, we often do. However we usually end up in the 26 to 27.5% range, NOT the 20 to 25% range. You see when you price your fees like 80,000 other recruiters, you get treated like 80,000 other recruiters. When you negotiate with some logic and have your fees based on your recruiting firms investment combined with profit, you are better received by the marketplace.
Try it!! you have nothing to lose. Getting just one or two percentage points more on a recruiting fee with a salary of $100,000 means you received $1,000 to $2,000 more in a fee for a conversation that may have lasted 10 minutes longer.