Freelance Technical Recruiter Fees structure and other info requested

Hi! I am trying to explore into the freelancing recruiter world and wanted to see if anyone could help me with information listed below:

  1. What kind of fees structure or commissions are paid out for contract placements and full time placements? Pls give some industry numbers so I can negotiate reasonably.
  2. Is there a non compete in place once you work with any company? If so, how long is it n effect?
  3. What are some good ways to look for clients?

Thank you for your help with this!

AR

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AR - Thanks for reaching out over chat. Here are a few tips. I will also send this out to a few good onsite recruiters here for you to get some feedback.

Based on the conversation I will say that you have a few options. You can set up as a fee based recruiter, a contract recruiter. 

Fee based simply collects the fee based on the your agreement and the salary of the person you are placing. Understand that in this model you assume the risk as you are not going to be paid if you are not placing candidates. You can place them perm or contract. On the East coast perm placements in tech are sitting at about 25-30% of the first years salary with a prorate 90 day guarantee. Placing techies on a contract you are looking at about a 75% markup on the hours worked.

Contract Recruiter: You will bill out your time based on an hourly rate. Currently tech recruiters on the east or contracting at $50-$60/hour. Much less than west coast, but that is expected.

You'll find a few people in the group here that can help get you going.

Ryan, Thank you for this information and helping me out. Could you please elaborate a little on the prorated 90 day piece?

Ryan is correct and his numbers reflect the West Coast too. :) Contract recruiters paid hourly can be anywhere from $50-90 / hr. As far as the prorated piece, let's say the candidate your client hires quits in 30 days. You've been paid 20K fee, and would refund a portion of that based on how long they were on the job those first 90 days. I rarely offered refund guarantees but almost always replacement guarantees up to 90 days. If you employ recruiters who make commission off billable dollars, you will likely pay a percentage of GM (gross margin) dollars. These can vary widely depending on how much overhead you are covering - are you paying for office space, internet/phone, business cards, job board access? The more you are covering the lower their commission rate is likely to be. If you're working with virtual recruiters expect to pay more and possibly even on 1099.

Non-competes - usually enforceable for up to a year, usually restricts recruiters from bringing their "book of business" with them. They are not always easy to enforce, and I think nearly impossible to do so in CA. In all my years I've only met one recruiter who's previous agency went after her - she ended up losing her case and it cost her over 10K in legal fees.

Good ways to look for clients? Well everyone has their "hook" I suppose, but remember that you are offering a service. Recruiting is not a product - some people tend to forget that and it causes recruiting to become very transactional.

I'd like to offer some input here as well - but before that how about telling us just a bit about what your experience has been in recruiting so far.  These questions seem to tell me you're not in recruiting yet - so I'm wondering if starting your own recruiting service is the right move at this point.

Hi Amy and Jerry! Thank you for writing back. So here is some information that might give you a clear idea of what I am thinking of doing. I am a technical recruiter with an agency right now and have been doing this for last 5 years. I am paid with a base salary + low comm.

I would like to start something of my own and as of right now I plan to work from home. My plan is to work not with just 1 company but with a few and pick and choose what requirements to work on. The client could pay me upon hire. Hope this gives you some idea. I am not sure if this is doable or not and if so, would like to know how to price for my services, etc.

So I assume you're talking full time placements? If you're going to place contractors you're going to need to have some sort of back office support for payroll, etc. If you're talking full time placements, then be prepared to make zero money for a few months, until you can get some job orders, get some candidates and put them together for a fee. Keep in mind payment terms, if you work with clients who are net 10, you won't see a check for 2 wks AFTER someone starts. You'll also need an accountant or some sort of help setting up an LLC or something so that you keep ahead of your own taxes. If benefits are important you should also look at self-insuring. Being an independent is fantastic, and I wish you the best of luck, but there's a lot more to it than just hanging a shingle and making placements. You're effectively going from recruiter/employee to business owner with all the responsibilities that come with it. Have you worked from home before? It takes tremendous self-discipline to stay on task - not everyone is wired that way.

and as far as prices for services, the standard 25-30% fee for full time hires is reasonable - you're still providing the same value (I hope! lol) that you would as part of a larger organization.

Great question....

Jerry Albright said:

I'd like to offer some input here as well - but before that how about telling us just a bit about what your experience has been in recruiting so far.  These questions seem to tell me you're not in recruiting yet - so I'm wondering if starting your own recruiting service is the right move at this point.

Amy- Thank you for helping me think through this. Setting up LLC will not be a big deal, my husband has one and I am sure he could help me with the process. I am covered for benefits through my Husband so that should be OK too.

Is it expensive to setup payroll, benefits etc should I consider working with contractors?

 

 

Just my 2 cents - but I think you need to "learn" the client side of our business before jumping into this on your own.  

Can you start working with clients where you are? 

Jerry- I am in AZ. I have not worked on client side directly but do have some idea because of my current interaction with the managers, and HR on daily basis.  I have a couple potential clients ( friends in business) in mind who might help me with getting the foot in the door but before I approach them, I'd like to ensure that I am well educated and prepared.
 
Jerry Albright said:

Just my 2 cents - but I think you need to "learn" the client side of our business before jumping into this on your own.  

Can you start working with clients where you are? 

OK then.  Just make sure you do not lower your fee or make any other concession because you're just starting out.  Few (if any?) clients have ever asked me how long I've been in business.  If you can perform/deliver then it doesn't matter.

Be confident, have conviction and follow through on any commitments you make.  You'll be fine.

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