What makes you think you deserve a "premium" fee?

Fee negotiations. Fun stuff, eh?

You finally connect with a manager that seems to need your help. You think you've done a good job "not" sounding like an idiot. Though the position was a little outside of your comfort zone you held on nicely. Your questions seemed to spark quite a dialogue: What projects will this person work on? How big is the team? Tell me about your company.........why do you LOVE working there? What are the types of companies that seem to have the best candidates? You know - all the questions you think will help you establish your credibility BEFORE you let them know your fee is...........(drum roll please........)

30%. Or maybe you start at 25%. Either way - you think you've executed your work flawlessly and hope they'll say "OK".

But that doesn't usually happen, does it? Not from what I see and hear.

"We have a policy of 18%". Or "All our vendors have agreed to a cap of 15%"

Damn. And you were so close!

So what do you do? How do you reply to this one? This is one of the 60 second periods of your day or week that GREATLY impact your income for the year.

Rather than suggest a canned reply (there are hundreds - and I've heard them - and tried them - all) let me ask you something: What makes you believe you should charge more than the others who have come before you? You might think "Well - must be the other agencies aren't providing the right candidates. They NEED me!"

But guess what? No they don't. The other agencies ARE getting it done. Turns out - you're just asking if you can play too! So now what? You better change your thinking on this one. You aren't the best. You don't have the greatest candidates. You have no "secret stash" of top talent. The guy in your inbox is also on your competitors desk. Know it. Live it. Deal with it.

What service do you provide which you think commands a higher fee? Have you spent much time thinking about this? If so - have you DONE anything about it? If you haven't - I've got news for you - you don't deserve a higher fee........


Views: 392

Comment by Paul Alfred on June 3, 2010 at 4:12pm
Jerry ... Back in the late 90's the conversation would have been you are either a buyer or supplier.... I think I have to agree with Sandra its about relationships now Company works at 18% accross the board if you need the business its great ... However, Our company does have some areas of specialty like IT Security and Actuarial/ US Tax and other specific areas of IT/Finance where we don't go below 30% or 25% ... I think you really need to have a focused niche and should be to describe your value proposition in order to defend the fees being proposed.
Comment by Sandra McCartt on June 3, 2010 at 5:15pm
Ok here's my sell if somebody asks me or if i want to differ myself. ( I don't cold call either Kevin. Never have and never will. I feel the same way, i literally go nuts when i get cold calls during my busy part of the day or in the evening)

Why do i deserve the premium fee?

"It's not what i do that is different, it's what i don't do." "I play by your rules, i don't call you 50 times a day or five minutes after a candidate interviews to get feedback or try and hard sell my candidate. I expect feedback or questions in a reasonable time frame". If you give me one listing i will not go to your web site and run ads /recruit for every position you have posted then try to submit candidates for positions that you did not list with me." "I don't call your hiring managers unles you ask me to meet with them or have a phone conference." I don't throw a kick ass righteous fit when you turn down the candidate i thought could walk on water." I will find out why i missed it and change direction instead of arguing with you or telling you that your hiring manager is a dumb ass who needs to be replaced". (that by the way was a quote that i heard last week from an HR director as to why they had dropped a recruiter off their radar)."I won't bore you with long speeches about how wonderful i am, i will just do my job." I don't send candidates that are marginal just to prove that i can flop something in your ATS so i have some goofy reason to call you and ask you about a C level candidate." I don't call you to whine that your job order, company , internal recruiter, other recruiters you work with or anything else sucks buttermilk." I got my ego in order a long time ago, if i don't know something about the specs you give me i'll ask , listen and then go research until we both learn something. I am not a one trick pony that can only recruit in one vertical. I have placed everything from fast food managers to subspecialty physicians who make a purple squirrel look like a garden variety weed. You have to move from one division of your company to the other so i can move with you as we learn to work together.

Besides all the don'ts that make you hate recruiters and their high blown bullshit, i am funny as hell and i will listen when you want to bitch about everybody you work for and with , the crazy candidate you brought in who did some nutty thing that made you look like an idiot and i won't tell anybody. Then we can get over our cheap selves, pick up the girls or the boys and go fill a position. If you need me to cut a fee a little bit to get you some help, i'll do it. If you ask me to help you fill 10 positions by the end of the month i will shoot you a quote for a turnkey fee if i get and exclusive or a retainer. I don't want to be the person you call when all else fails and heat is on. I do want to be the person you call the day you get the req and you want to fill it fast. I will stay up all night looking for candidates and i will work on weekends to help you hit your deadline. You can call me at home or on my cell anytime. My goal is to be part of your team, not some ass that you have to call and don't really want to.

Most of all i want to prove to you that not all recruiters are arrogant, ignorant, narcisitics jerks who pride themselves on knowing more about what you do than you do while driving you crazy in the meantime and wanting to be overpaid to terrorize you. How about lunch tomorrow i have some great "wretched recruiter" stories that will make you laugh.
Comment by Jerry Albright on June 4, 2010 at 9:07am
Sandra - I agree with every word! Good stuff - thanks for the input. I find success comes (at least for me) in simply DOING the work. It's really that easy isn't it!?

Rayanne - yes - you are correct.
Comment by Sandra McCartt on June 4, 2010 at 12:09pm
Thanks Rayanne

Thanks Jer. I think so. It's worked for me for a long time.
Comment by Mike Hard on June 9, 2010 at 10:15am
Little late to the party, but this is a great topic.

Employers hate haggling over the fee as much as you do. HATE IT. It's a waste of time, not core to the main issue, and even when it's over they still don't know whether the recruiter is going to come thru. There are bad staffing depts just like there are bad headhunters, and the bad employers try to save money by haggling or low balling a fee, but most just realize there's a market and they can set a fee within reason (and it ain't 30%).

Employers do have the leverage these days in that they have the jobs. In this market especially, they can name thier fee and find plenty of good recruiters who will take it. There are caveats all over this of course, I've seen employers put out a 10-15% fee for a critical role and I grimace because I know the quality of recruiters they're likely to get. While that level of fee may work for someone hiring volume, it just won't get you the cream of the crop. Where the market stands now for fees is debatable, but I think if you want a good recruiter who is going to send you quality candidates that you can't source yourself off Monster for a critical role, 20% is most common fee followed closely by 25%. Those two levels are still the most popular price point on BountyJobs at least.

What justifies that gap between 20 and 25% (which I think gets at Jerry's question)? I can only speak for what I see on Bounty which I know is different but I see three things that can apply to broader market as well: 1) You've got to present yourself well and present yourself truthfully. Don't go after every job - go after the ones you truly specialize in and have the stats and the experience to back up your
Comment by Mike Hard on June 9, 2010 at 10:18am
wow that was embarrassing...premature posting.

2) take the search step by step. The 20% (or lower) recruiters send 2-3 candidates right away and see what sticks - the 25% recruiters wait a few days, send a great one, test it and adjust. 3) deliver.

Sorry for long comment. It is a good topic
Comment by Kevin Jenkins on June 12, 2010 at 9:42am
Mike,

Excellent post (one of the few sane ones I've read recently). You are so right, the types of prospects you want to be doing business with DO NOT HAGGLE! That is just not their style. You either sell your value convincingly or you don't. So they say YES or NO; but they don't haggle.

I also wanted to comment on this being an "employers market." I'm not so sure I agree with that. For the best talent, it's always an employee's market. But I understand what you mean in general: the employers have more leverage in these economic times. However, I will make one bold prediction: this is the LAST time they will ever have it. I think the cycle will soon be broken and talent - going forward - will have the leverage.

Regarding fees, I totally agree with you. In fact, my fees are based on where I will be sourcing and I am honest with my clients upfront. I can do 15% as long as they understand I will have a researcher trawling the job boards. But if they want a very high quality candidate pool where I have to do the rigorous market research and referral networking to find them candidates that are "off the radar" then the fee is minimum %20 and even at that rate they must at least at least offer exclusivity on the search (if they're unwilling to pay a retainer).

When it comes to recruiting, the value you receive is directly proportionate to your skin in the game. A retainer fee or exclusivity on the search assignment represents your skin in the game.
Comment by Mark Lennard on July 24, 2010 at 12:30pm
Fee negotiations are fine before you start the recruitment process but definitely NOT once the candidate is found and on interview with the client.

Agree the fee from the outset and have a clear understanding of what you are being paid for the service you are providing and NEVER re-negotiate the fee when the client is about to make the offer..

My example to recruitment staff when training in the past is, would you go to a restaurant and order a steak, eat it and then suggest you pay less than the price that was displayed on the menu? Well unless the steak was as tough as old boots then no, you would pay the price agreed at the outset and the same goes for recruiters and clients.


Don't be bullied into fee negotiations but also don't have a cavalier attitude that you are better than your competitors, you need to do what recruiters do best and sell to your client your USP's and why they should pay you what you are quoting. If you offer nothing better than the guy charging 15% then how can you expect to charge more ??
Comment by Salvatore Petrara, CPC on August 16, 2010 at 4:18pm
There are circumstances that make a fee grow or shrink.
Now I have a client that pays 25% of base only.
They needed a fast hire in the UK yet had no budget for the fee. Now this role is a CTO role and paid 225,000 GBP. A brand new job for a brand new office that needs to hire another 2 dozen technologist (get my drift).
Now I agreed to a 15% fee 0 day guarantee and exclusive rights to the search (not retainer, just exclusivity) fee due upon receipt.
It worked out well and the candidate just started.
Now I will be getting the other reqs to work on @ 25%.
So it is relative...
Comment by Daniel Walker on May 20, 2015 at 10:56pm
I love cold calling. When I do it, and get results, I feel like I've won. It's a little mini success to me that drives my lil Engine/Ego :)

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