The 3 Recruiting Fee Agreements and How to Raise Your Fees

Jul 7, 2022 | Growing Recruiting Revenue, Retained Search | 0 comments

Recruiting Fee Agreements

How many different agreements should I have? Contingent, engaged, and retained? Can you share samples of these? My goal is to have all fees to 25%. -Robert

The 3 Fee Agreements

There are actually two parts to those agreements. We did some retained business, so traditional retained, a third, a third, a third. We did a lot of deposit-based searches. X amount upfront (usually about a third) balanced on successful completion of the search. And we did contingency.  

Our Inner Circle coaching members can access our sample deposit-based search agreement and a sample contingency agreement. Click here to join for just $7.

Here is the disclaimer. I am not a lawyer, nor have I stayed at a Holiday Inn Express lately. I have not updated these fee agreements. They have not been updated on purpose because it is an ever-evolving landscape.  If you want to take one of these, I would find an attorney, invest a few hundred dollars, and modify them based on your state’s business laws. 

These are templates. These are something you can use, but make sure they are binding. You want to consult with somebody who is a legal expert. But they are available to download in the Inner Circle area.

Raising Your Fees

The second part is in response to your goal to increase your fees to 25%. There is no question there, but I want to help you a little. 

Ask for 28.6%. Give yourself a little room to negotiate. There is tremendous magic in the number 28.6% either of base salary or guaranteed earnings, whatever you choose to do because the hiring manager will often ask, where did you come up with that number? 

My answer was always: 

I could honestly say at our firm, the Hudson Consulting Group, we have done time and motion studies. For us to execute our process, reach out to a list of 60 to 80 candidates, up to seven times each, especially if it is contingent, factoring in the likelihood of success and failure, and we know how long it takes us to do that and make a fair profit, the fee is 28.6%.  

Did we get it all the time? Of course, we did not get it all the time. But I found the bandwidth of the number that entered into a negotiation was significantly smaller than if I quoted 25% or 30%.  

The Value Proposition

It is all in the conversation. The value proposition is the central part of the conversation that will increase the likelihood you successfully raise your fee from wherever it was to wherever you want it to be. You have to have a tremendous value proposition. If the client only pays 20%, they will not pay you 25% because they like you: some will, a small percentage, but that is not a scalable business model. 

You have to have a very clear understanding of their problem and the consequences of them not fixing that problem, and then have an exact, specific, and precise prescription to show them how you will fix it and what your process is.  

The Close

I always close my conversation with the following language:

For us to execute that, Mr. or Ms. Hiring Manager, represents an investment of 28.6% of the individual’s guaranteed compensation with a third of that upfront. Since this is going to be a position that is about $100,000, we would need a deposit of $9,500. Are you authorized to approve that, or do we need to engage other people in the organization in this conversation?  

You might not want to ask for the retainer, but the process is still the same to the point where you quote the fee. We teach a lot of that in our retainer product, Retainers for Recruiters. 

It is part of our core program too. 

The art of taking retainers and getting exclusives at a higher fee starts in the first questions you ask after the individual states they need help. I cannot cover all that in this blog because the training alone is about three hours.  

For more information on raising fees, specifically with clients, check out our recent blog, How to Increase Your Fees with Current Clients.

A great question. Again, to access our fee agreements, join the Inner Circle today for just $7.

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

1. Grab a free copy of my Retainer Blueprint

It’s the exact, step-by-step process of getting clients to give you money upfront. https://get.therecruiteru.com/lm​​

2. Join the Recruiter Think Tank and connect with firm owners who are scaling too It’s our Facebook community where smart recruiters learn to make more money and get more freedom. https://www.facebook.com/groups/there​​…

3. Join me at our next event

3x a year, I run a 3-day virtual intensive, sharing the 9 key areas that drive a 7-figure search firm. Click here to check out the dates of our upcoming event: https://get.therecruiteru.com/emerge

4. Work with me and my team privately

And if you ever want to get some 1:1 help, we can jump on the phone for a quick call, and brainstorm how to get you more leads, more placements, and more time. https://get.therecruiteru.com/scale-now​

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