Part of the staffing & recruitment agency hub — an educational cluster covering how agencies work, the placement models and how employers and candidates work with them. For decision-style reading, see the staffing & hiring comparisons.
This page explains those structures conceptually so you can read a proposal and compare like with like. It deliberately contains no percentages, amounts or pricing — those are set by each agency and vary by role, market and arrangement. It is educational, not pricing or legal advice.
Who this page is for
- Employers budgeting for agency support
- Finance and procurement teams reviewing proposals
- HR teams comparing agencies on a like-for-like basis
- Founders weighing agency cost against internal hiring
Core concept
Fees follow the model. For temporary staffing the agency bills the hours worked at a rate that bundles the worker’s pay, employment costs and a service margin. For permanent placement the agency charges a one-off fee when a hire is made, commonly structured around the role’s salary.
Beyond the headline structure, the detail matters: what a markup includes, whether a placement fee carries a guarantee period, and what triggers a replacement or rebate if a hire leaves early. These terms affect value as much as the headline figure does.
The goal when comparing agencies is to compare structures and scope, not just numbers. A lower headline with a weak guarantee, or a bundled rate that hides costs, can be worse value than a clearer, slightly higher one.
How it works
- Temporary markup: hours billed at a rate above the worker’s pay, bundling employment costs and service
- Permanent placement fee: a one-off charge on a successful hire, often structured around salary
- Retained fee: paid in stages for a committed, structured search
- Managed service or RPO: an ongoing charge for running part of the hiring function
- Guarantee or rebate: terms covering a replacement if a hire leaves within an agreed period
Plan the hire before you source with the recruitment planning checklist, and keep screening consistent using the candidate screening checklist.
Key considerations
- Exactly what a temporary markup includes and excludes
- Whether a placement fee carries a guarantee and what triggers it
- How retained stages are structured and what each buys
- Whether long-running temporary costs exceed a permanent hire
- How to compare proposals on structure and scope, not headline alone
Advantages
- Clear structures make budgeting and comparison possible
- Temporary models tie cost to actual usage
- Guarantee periods share some risk of an early departure
- Retained stages bring commitment to hard searches
- Transparency on inclusions supports fair comparison
Trade-offs
- Bundled rates can hide what is and is not included
- Long temporary assignments accumulate cost
- Headline numbers can mislead without the terms behind them
- Guarantee conditions vary and can be narrow
- Comparing agencies is harder when scope differs
Common mistakes
- Comparing agencies on headline cost alone
- Overlooking the guarantee or replacement terms
- Assuming temporary is always cheaper than permanent
- Not clarifying what a markup actually covers
- Failing to get the commercial terms in writing
Practical checklist
- Ask each agency to explain its fee structure plainly
- Confirm exactly what a markup includes
- Check the guarantee or replacement period and its triggers
- Model long-running temporary cost against a permanent hire
- Compare on structure, scope and risk, not just price
- Get all commercial terms in writing before starting
For interviews, draw on the interview question bank and the hiring scorecard guide; to plan the wider workforce, see the workforce planning guide.
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