Recruitment agency fees

[DavidBH]

This is my first post on here so hopefully someone out there can help. I am looking a feasibility study for a potential online business in the recruitment industry but the prices charged within this industry seem to vary so widely that its hard to get an accurate average to work with.
Obviously many offer the full service from CV through to interview, feedback and client start and others offer just a basic CV service with a multi post blanket advert on the major job sites. I have seen figures of approx £1500 + VAT for the full service and around £500 + VAT for the abbreviated one. These are for full time employment.
Does this seem a fair amount, given that the average cost of recruitment is around 6k for each position.
I also see figures of between 5-20% of the annual salary for permenant roles. Is there an accepted industry standard for contract and temp roles ie a percentage of the hourly rate or flat fee?
Sorry its a fairly broad question but your help would be invaluable.

Many thanks
David

 

[10032012]

This is my first post on here so hopefully someone out there can help. I am looking a feasibility study for a potential online business in the recruitment industry but the prices charged within this industry seem to vary so widely that its hard to get an accurate average to work with.
Obviously many offer the full service from CV through to interview, feedback and client start and others offer just a basic CV service with a multi post blanket advert on the major job sites. I have seen figures of approx £1500 + VAT for the full service and around £500 + VAT for the abbreviated one. These are for full time employment.
Does this seem a fair amount, given that the average cost of recruitment is around 6k for each position.
I also see figures of between 5-20% of the annual salary for permenant roles. Is there an accepted industry standard for contract and temp roles ie a percentage of the hourly rate or flat fee?
Sorry its a fairly broad question but your help would be invaluable.

Many thanks
David

The rules have largely changed. It used to be that recruitment is 10-15% of the first years annual salary (basic job roles) but employers no longer want to pay so much to recruit.

So, candidates no longer get a rejection letter and employers generally used to write back confirming receipt of postal applications. Many employers don't even call or write to interview candidates to say they didn't get the job. With so much focus of online applications (and CV by email) there is no longer the cost of mailing out job application forms with nice professionally printed presentation folders. Employers used to offer the cost of travel as a "good will" gesture. Most wont offer waiting candidates refreshments.

It will vary upon industry, company size and location etc. but the following is a suggestive guide to what some employers budget for per job position advert - online medium only - rough guide

Salary < £3000 is FREE (Company website and/or Jobcentre only)
Salary < £6000 is £99
Salary < £9000 is £199
Salary < £1300 is £299
Salary around £14-16,000 is £399
Salary < £20000 is £499

£6000 average recruitment cost? For most SMEs recruiting for a non-specialist position... wont spend anywhere near 6 grand. I would say you are looking around a budget of £2000 top end - of course such agencies will play on these outdated figures.

So some companies, even small businesses will spend lots of money recruiting (such as big advert in the job paper etc.) but most these days will not want to be so wasteful with money.

Perhaps you should rethink your strategy? Instead of being yet another agency with too competitive prices on competitors with so little differences in price, write down the services you want to offer (all different packages from small to large), work out your costs and then work out how much you want to charge.

 

[DavidBH]

The rules have largely changed. It used to be that recruitment is 10-15% of the first years annual salary (basic job roles) but employers no longer want to pay so much to recruit.

So, candidates no longer get a rejection letter and employers generally used to write back confirming receipt of postal applications. Many employers don't even call or write to interview candidates to say they didn't get the job. With so much focus of online applications (and CV by email) there is no longer the cost of mailing out job application forms with nice professionally printed presentation folders. Employers used to offer the cost of travel as a "good will" gesture. Most wont offer waiting candidates refreshments.

It will vary upon industry, company size and location etc. but the following is a suggestive guide to what some employers budget for per job position advert - online medium only - rough guide

Salary < £3000 is FREE (Company website and/or Jobcentre only)
Salary < £6000 is £99
Salary < £9000 is £199
Salary < £1300 is £299
Salary around £14-16,000 is £399
Salary < £20000 is £499

£6000 average recruitment cost? For most SMEs recruiting for a non-specialist position... wont spend anywhere near 6 grand. I would say you are looking around a budget of £2000 top end - of course such agencies will play on these outdated figures.

So some companies, even small businesses will spend lots of money recruiting (such as big advert in the job paper etc.) but most these days will not want to be so wasteful with money.

Perhaps you should rethink your strategy? Instead of being yet another agency with too competitive prices on competitors with so little differences in price, write down the services you want to offer (all different packages from small to large), work out your costs and then work out how much you want to charge.

Thanks for the reply, thats exactly the kind of info I was after. I have a contact in a large specialist recruiter but he is pretty vague on those types of issues. I agree with your last statement, we are definately steering away from the generic online recruiter but its good to get a feel for what kind of pricing strategies already exist. Its a case of trying to be competitive but not underselling our services either.
Thanks again for the help.

 

[Richie N]

Agencies still charge the % fee, it just depends on the sector and the agency.
There are online recruiters that just forward CVs for a low flat fee but offer nothing more than just that.
It depends on what service you are offering and what candidates you have as well.

 

[Jet Virtual]

Welcome to the forum David