What recruiting actually costs, structure by structure.
Six ways agencies charge for the same outcome, priced against one real hire in the Philippines, plus the contract terms that move the final number more than the headline percentage does.
Contingency search is 15–25% of first-year salary, owed only if you hire someone they presented. It is the default for most non-executive roles and carries the least commitment.
Retained search is 25–35%, billed in instalments and usually owed whether or not you hire. It buys dedicated capacity and confidentiality, and it is priced for executive roles.
Anything quoted as a monthly rate is a different kind of cost. Staff augmentation markups of 30–70% and managed seat fees of $699–$2,500+ recur forever. Over a multi-year hire they cost several times a one-time placement fee.
The number on the proposal is rarely the number you pay. The guarantee terms, the fee basis, and the ownership clauses move it more than the headline percentage does.
Six ways to charge for the same outcome.
| Structure | Typical price | When you pay | What you get |
|---|---|---|---|
| Contingency search | 15–25% of first-year base | On placement, nothing if you never hire | A search run in parallel with other clients, at their priority not yours |
| Retained search | 25–35% of first-year total comp | In thirds: engagement, then shortlist, then placement | Dedicated capacity, market mapping, confidentiality, a named consultant |
| Container / engaged search | A fixed engagement fee plus a balance on placement | Part upfront, remainder on hire | A search with real commitment on both sides, priced below retained |
| Staff augmentation | 30–70% markup on the pay rate | Every month, indefinitely | Capacity, speed, and the ability to exit quickly |
| Managed service / seat | $699–$2,500+ per seat per month | Every month, indefinitely | A managed worker on the provider’s books, with replacement included |
| Managed marketplace | 10–25% take rate | Baked into every invoice | A pre-vetted supply pool and a contracting layer, largely self-service |
- The first three are one-time costs. The last three recur for as long as the person works with you.
- A percentage of salary and a percentage markup are not comparable numbers, even though both are quoted as percentages.
- If a proposal quotes a bill rate rather than a fee, ask what the person actually receives.
Same person, six invoices.
an executive assistant in the Philippines at $1,200/month, or $14,400 a year, who stays two years.
| Structure | Cost of the search | Two-year total (search + pay) |
|---|---|---|
| Contingency at 15% (bottom of the band) | $2,160 | $30,960 |
| Contingency at 25% (top of the band) | $3,600 | $32,400 |
| Retained at 30% | $4,320 (owed largely regardless of outcome) | $33,120 |
| Staff augmentation at 50% markup | No separate fee | $43,200 |
| Managed seat at $1,500/month | No separate fee | $36,000 |
| Self-run search on a job board | $0–$500 for the posting, plus 20–60 hours of your time | $28,800 plus the posting and your hours |
Two things matter in that table. First, the gap between the bottom and the top of the contingency band is real but small next to the gap between any one-time fee and any recurring one. Second, the self-run row is only cheap if your time is free, and it is not. Twenty to sixty hours of a senior person is frequently worth more than the fee it saves, which is the arithmetic in section 05.
Where the money actually goes.
A placement fee looks enormous next to the visible artefact, which is a handful of CVs and a couple of introductions. Here is the work it is actually buying, roughly in proportion:
- Outbound sourcing, which is the majority of the hours and the part you cannot see. Most strong candidates are not applying to anything.
- Screening: first-round conversations with people who will never reach you, which is the entire point.
- Coordination: scheduling across time zones, chasing, and keeping candidates warm through your process.
- Reference and background checks on the people who reach your final round.
- The guarantee reserve, which is the cost of rerunning searches that fail, spread across the ones that do not.
- Margin, which is smaller than buyers assume once the failed searches are priced in.
The guarantee reserve is worth dwelling on because it explains the pricing structure. Under contingency, an agency is paid for maybe one search in three that it starts. The fee on the successful one has to cover the two that went nowhere. That is why contingency percentages sit above what the work would cost if every search closed, and why retained search, where the agency is paid either way, is cheaper per hour of effort even though the headline percentage is higher.
The headline percentage is not the price.
| Ask this | Why it matters | What good looks like |
|---|---|---|
| What is the fee calculated on? | Base salary, total cash, or total compensation including bonus and equity. The spread between these is often 20% or more of the fee. | First-year base salary, stated explicitly. |
| What does the guarantee actually do? | A replacement guarantee reruns the search. A refund guarantee returns money. They are very different products and both are called “guarantee”. | A stated window, in writing, with the trigger conditions spelled out. |
| When is payment due? | On acceptance of the offer, or on start date. Paying on acceptance means paying for people who never show up. | On start date, or net 30 from start. |
| Is there an exclusivity period? | Exclusivity can be reasonable in exchange for commitment, or it can lock you into a slow search with no alternatives. | Either none, or time-boxed with a clear exit. |
| What are the off-limits terms? | Some agencies bar themselves from poaching your staff. Some do not, which means the person they placed can be re-placed elsewhere later. | A no-poach covering your whole company for the life of the relationship. |
| Who owns the candidate data? | If the agency owns it, candidates they sourced for you are theirs to represent to a competitor next month. | You keep everything sourced under your engagement. |
| What is the backfill and conversion policy? | Under staff augmentation, converting someone to a direct hire often triggers a buyout that nobody mentioned at proposal stage. | A stated conversion fee that declines over time, or none after twelve months. |
When paying anyone is the wrong call.
Every structure above is a way of buying hours you would otherwise spend yourself. Sometimes those hours are cheaper than the fee.
A placement fee is priced as a percentage of salary, but what it actually buys is a search: sourcing, screening, coordination, and the risk that none of it lands. A serious self-run search for one role costs twenty to sixty hours of someone capable, plus $0–$500 per posting, per month for a posting if you want reach beyond your own network. So the honest comparison is not fee against zero. It is fee against your own loaded hourly cost.
For an executive assistant in the Philippines at $1,200/month, a fee inside the 15–25% band is $2,160 to $3,600. Divide that by the hours it saves and you get a price per hour you can hold against what an hour of your own time is worth:
| Hours the search would have taken you | At a 15% fee ($2,160) | At a 20% fee ($2,880) | At a 25% fee ($3,600) |
|---|---|---|---|
| 20 hours (a straightforward role with real inbound) | $108/hour | $144/hour | $180/hour |
| 40 hours (a normal mid-level search) | $54/hour | $72/hour | $90/hour |
| 60 hours (scarce skills, heavy outbound) | $36/hour | $48/hour | $60/hour |
Two consequences fall out of that table, and they point in opposite directions. On a lower-salary role the fee is small in absolute terms, so the implied hourly price is low and buying the search looks obvious, right up until you notice that the agency has to work the same number of hours for a smaller fee and may simply decline the brief. On a higher-salary role the fee is large enough that forty hours of your own time is genuinely the cheaper option, if you have forty hours and the market knowledge to spend them well.
The minimum fee nobody mentions at proposal stage
Because the work does not shrink with the salary, most agencies apply a minimum placement fee. On a low-salary role that minimum, not the percentage, is the real price, and the effective rate can land well above the top of the 15–25% band. Ask for the minimum in writing before you compare two proposals on percentage alone.
Three cases where no fee is worth paying
- You already get strong inbound for this role. If a posting reliably produces people you would hire, a search is buying sourcing you do not need. Pay for screening time instead, or for nothing.
- The role is short-term. A one-time fee amortises over tenure. Paying it for someone who leaves in three months is the worst version of every structure on this page.
- You cannot yet describe the role. A search cannot resolve an undecided specification, it can only spend money while you resolve it. Write the scorecard first, then buy.
Seven questions, asked in writing.
- Is the fee calculated on base salary or on total compensation?
- Is the guarantee a replacement search or a refund, and what exactly triggers it?
- Is payment due on offer acceptance or on start date?
- How many other clients is this recruiter working simultaneously?
- Who owns the candidates sourced under this engagement after it ends?
- If this is a monthly rate, what does the worker actually receive, and what is the conversion fee?
- What happens to the fee if we pause hiring for a quarter?
An agency that answers all seven plainly is usually a good one, regardless of where its percentage sits. An agency that gets vague around the fee basis or the conversion fee is telling you where the money is hidden.
Questions people actually ask.
What is a typical recruitment agency fee?
What is the difference between contingency and retained search?
Why do staffing agency markups cost so much more than a placement fee?
Is a recruitment fee negotiable?
Do recruiters charge a minimum fee on low-salary roles?
When is paying any recruiting fee the wrong decision?
Next in the buying decision.
Why a one-time fee beats a recurring markup inside the first year, with the break-even month worked out.
ReadThe volume at which paying per placement stops making sense and a fixed-cost model takes over.
ReadFees are only half the cost question. The other half is who legally employs the person.
ReadWhere take rates sit against placement fees, and how to read a vendor’s retention claim before you believe it.
ReadHireTalent.ph runs searches for employers hiring in the Philippines. If you want one quoted for a specific role, describe it here.