Placement Fee Structure on Commission Only Positions

Hi there,

I need a little help.

I have a new client that is looking to hire within their company but they're looking to pay 15-20% commission to the person they hire in this role. The person won't have a base salary.

My question is how do I determine what the placement fee should be from a commission position?

Anyone work with these types of jobs?

Thanks,
Jenn

Views: 3178

Comment by Sandra McCartt on November 22, 2010 at 5:03pm
Ask them what they anticipate someone who would do them a good job should make in the first year. If they say 50K set the fee based on 40K with the caveat that if they make more you will look at the end of the year and bill the balance of the fee based on what they actually earned less the fee already paid. Or the easier solution is to bill them a flat fee to fill the position that they will agree to that makes you happy.
Comment by Paul Alfred on November 22, 2010 at 6:38pm
Hi Jenn,

I would charge a flat fee - I don't the nature of sales role so I can't tell you what that is but lets say for sake of simple math $8k -$10k for a hard to find resource one time only search and $1-$3k for multiple requirements... Your client needs to also understand that your fee cannot be tied to the end commission of what they would pay your proposed candidate.

Hope this leads you in a positive direction ...
Comment by Jerry Albright on November 23, 2010 at 11:57am
Are they an agency? And hiring recruiters? A little more detail will help.
Comment by Jason Monastra on November 24, 2010 at 4:13am
Jenn

Though I cannot offer direct hands on experience doing this, I have a network connection that simply places sales people throughout the country. Some of them salary plus, some commission only. The fee structure appears direct especially if the company is established and will provide three year history. Questions you should ask:

Expectations for sales in the first year?

Commission perentage of those sales?

In the past three years, what is the average first year sales person's revenue and therefore compensation?

From those, you can see clearly the compensation the company would expect to pay if goals are met, as well as what people are actually attaining at the client. Once determined, assign a normal fee structure based on those figures.

Hope that helps.
Comment by Jenn Asson on December 5, 2010 at 2:15pm
Hi Everyone,

Sorry for the late response to this posting but I was out of town for the holidays and I just recently heard back from the client regarding this opportunity. Here is a little more info on the opportunity.

The client who is a startup social networking organization is looking for someone with 3-4 years media sales exp with a radio or print background. Should have exp working directly with senior marketing execs. at the client level. They want someone full-time or part-time who can work virtually from home.

Sales Commissions per sale range from 15% - 20%, with the average monthly commission earned being $3600+. Additional perks include free products and opportunity to attend events and trade shows.
Comment by C. B. Stalling!! on December 6, 2010 at 8:12am
I would charge between $5,000 to $7,000 flat fee. No refund policy a replacement candidate policy
Comment by Craig Silverman on December 8, 2010 at 1:00pm
I would agree with the suggestions to go with a flat fee on these. Pick a number you are comfortable with that is in line with the difficulty in finding these people in your markets. With volume you can offer better pricing but make sure you get the volume so the discounts should be earned via multiple placements and not given out of the gate.

You could also go with a blended container approach where you get a portion of the fee or retainer piece up front and then a smaller fee per placement on the back end, sometimes called "retingency"
Comment by Gene Leshinsky on December 30, 2010 at 3:21pm

I would be very careful recruiting for these guys without a solid contract in place and no guarantees. Are you sure they can even afford you?

Comment by Dick Smith on January 1, 2011 at 3:32pm
This deal sounds like a lot of risk/time commitment on your side with very little upside for you. I'd consider spending that time finding other clients who understand fee structures and the value of the services you provide. Or $3600 x's 12 @ 25% or 30%. If they sign a fee agreement to that effect then go for it.

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