Conversion Fee - what kind of conversion schedule are you getting on contract-to-hire engagements?

I recently placed a couple of candidates at a client on temp-to-hire contracts and now realize I probably sold myself short on the conversion fee schedule. These are IT roles, software engineering and QA.

What kind of terms are you getting from clients - both in pro-rated fee discounts and total hours worked before a free conversion is available?

Thank you.

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Permalink Reply by Anthony Wilkinson on August 20, 2012 at 8:58am

If our client hires someone after 6 months there is no fee. But if they hire them anytime before then we are getting anywhere between 15%-8% depending when the conversion takes place.

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Permalink Reply by Bill Schultz on August 20, 2012 at 8:41pm

20% less 10% of fees paid, based on a 50% markup

So if person makes $100 per hour and you charge $150

and they worked 100 hours prior to conversion. And they are going to make $100,000

100,000 x 20% +$20,000 less $1500(15,000 x 10%)= $18,500

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Permalink Reply by Debbie Fledderjohann on August 21, 2012 at 9:55am

Scott, you may want to download Top Echelon Contracting's free conversion fee agreement samples, which can be requested at http://www.topecheloncontracting.com/conversion-fee-agreement-samples/ Both examples that are provided have been used succesfully by other recrutiers. We hope this helps, and if there is anything else Top Echelon Contracting can do, please let us know!

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Permalink Reply by Jerry Albright on August 21, 2012 at 3:01pm

The simplest way is to have your fee agreed upon where they can hire the person at any time. Upon hire - the fee is reduced by a specific dollar amount for each hour worked under the agreement.

Example:

Customer may hire consultant as a full time employee at any time during the course of this agreement. Upon hire a 30% fee will be charged based on initial starting salary. This fee shall be reduced $10 per hour for all hours worked under this agreement.

I just typed that rather quickly - so you'll want to fine tune it. The overall theme there is that the fee will be reduced per each hour. I don't like the "no fee after 6 months" or anything based on any other factor than specific hours worked. It's the most fair (IMHO) option for all parties.