Direct-Hire Placement Fees: What Staffing Agencies Charge (and How to Set Yours)

A direct-hire (permanent placement) fee is the one-time charge a client pays when your agency finds and places a full-time hire for them. Unlike a temp placement, there's no ongoing bill, you're paid once, as a percentage of the role's salary. Getting that percentage right is the whole game.

Here's how placement fees are calculated, how guarantees work, how to set your own rate, and a free placement fee calculator to run the numbers.

How the Fee Is Calculated

The standard structure is a percentage of the candidate's first-year base salary:

Placement Fee = First-Year Salary × Fee %

Fees typically run 15–25%, with 20% a common midpoint. So an $85,000 role at 20% is a $17,000 fee. Base salary is the usual basis, bonuses, commissions, and other compensation are normally excluded unless your agreement says otherwise.

Contingency vs. Retained

• Contingency. You're paid only if your candidate is hired. Most agency direct-hire work is contingency, higher risk for you, so often priced at the upper end of the range.
• Retained. The client pays a portion upfront to engage you exclusively, common for executive and hard-to-fill searches. Lower risk, and the fee is often structured in installments.

Guarantee Periods

Almost every direct-hire agreement includes a guarantee period, commonly 30–90 days. If the hire leaves (or is let go) within it, you provide a replacement search or a prorated refund. The guarantee doesn't change the fee math, but a longer guarantee is worth a higher percentage, you're taking on more risk.

How to Set Your Percentage

A few factors move the number:

• Difficulty and specialization. Niche, senior, or credential-heavy roles justify 20–25%+. High-volume, easier-to-fill roles trend lower.
• Guarantee length. More risk to you = a higher fee.
• Relationship and volume. A client sending you steady direct-hire work may negotiate toward the lower end; that can still be worth it on volume.

A Worked Example

An agency placing three professionals in a quarter at an average $90,000 salary and a 20% fee:

• Per placement: $90,000 × 20% = $18,000
• Three placements: $54,000 in fees

Run direct hire alongside your temp desk and those one-time fees can meaningfully smooth revenue between billing cycles.

Run the Numbers

• Placement Fee Calculator — first-year salary and fee % in, with 15/20/25% tier comparison.
• Conversion Fee Calculator — the temp-to-hire buyout equivalent.
• Direct Hire & Executive Search — how FreshStaff manages placements, fees, and guarantees.

The Bottom Line

Direct-hire fees are simple arithmetic, first-year salary times your percentage, but the percentage should reflect the search's difficulty and the guarantee you're offering, not a reflex 20%. Price the risk, put the guarantee terms in writing, and track placements and fees in one system so nothing falls through the cracks. Our post on temp-to-hire vs. direct placement covers when to steer a client toward each model.

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For broader benchmarking on placement fees and recruiting economics, see the American Staffing Association's research and resources.