Recruiter Commission Calculator
A recruiter commission, usually called a placement fee, is what an employer pays an external recruiter for delivering a hire. For permanent roles it is almost always a percentage of the new hire’s first-year salary, most often 15 to 30 percent. This calculator turns any salary and fee percentage into the dollar fee per hire and the total cost across multiple hires.
The fee is only one part of hiring economics. To see the full picture, including internal hours and vacancy cost, run the numbers through our cost per hire calculator. If you are comparing what agencies charge against the cost of placing contractors, the cost per placement calculator breaks out the agency side specifically.
Quick Answer
A $120,000 hire at a 20% fee costs $24,000 in recruiter commission ($120,000 x 0.20). Three identical hires would total $72,000 in placement fees.
Key takeaways
- Most contingency placements cost 15-25% of first-year base salary, with 20% the industry benchmark.
- Retained executive searches run 25-35% and usually count bonuses and guarantees in the fee base, not just salary.
- The fee base matters as much as the rate: clarify whether allowances, sign-on bonuses, and guarantees count before signing.
- Temp and contract markups (35-50% on hourly rates) are a separate model from placement fees and recur on every invoice.
How recruiter commissions are calculated
The standard formula is one multiplication.
A $120,000 base salary at 20% gives $24,000. Where the math gets interesting is the definition of "first-year salary." In contingency arrangements the base is usually base salary alone. In retained searches it is typically first-year total cash: base plus guaranteed bonuses, sign-on amounts, and fixed allowances. Discretionary bonuses and multi-year equity grants are normally excluded. Nail down the definition in the service agreement, because a 20% fee on $120,000 and a 20% fee on $140,000 of total cash differ by $4,000.
Recruiter fee models compared
Percentage placement fees are the default, but three other models cover the rest of the market. The right one depends on role seniority, volume, and how hard the search is.
| Fee model | Typical cost | Best for |
|---|---|---|
| Contingency | 15-25% of first-year salary Most common | Standard permanent roles; you pay only on hire |
| Retained search | 25-35% of total cash, paid in installments | Executive and senior leadership roles |
| Flat fee | $5,000-$20,000 per hire | High-volume or narrow-band hiring with predictable salaries |
| Temp / contract markup | 35-50% on the hourly rate | Temporary and contract workers; recurs per invoice |
The temp markup deserves special attention because it hides in plain sight: a 40% markup on a $50 hourly contractor rate is $20 an hour, every hour, for the whole assignment. Flat fees flip the incentive the other way, giving budget certainty regardless of where the final offer lands.
What the benchmarks say
Industry data clusters tightly around the same numbers. Contingency fees of 20% are the most cited benchmark, with the full typical band running 15-30% depending on role scarcity and seniority. Temp staffing markups average 50-60% on W-2 hourly rates, while aggregate staffing-industry gross margin sits near 21%, a reminder that much of the markup covers taxes, insurance, and benefits rather than pure profit.
Use the calculator above to test where your quote lands: anything at or under 15% for a standard role is worth a careful look at what is excluded, and anything over 25% should come with retained-search service levels, not contingency terms.
Worked examples: one hire, three hires, and a retained search
The calculator above handles all three cases with the same three inputs. The examples below show how the same formula behaves as the inputs change, so you can sanity-check any quote before you sign.
The table below runs four realistic quotes through the formula, so you can compare a standard hire, a volume hire, and an executive search side by side.
| Scenario | Salary x fee | Per hire | Hires | Total fees |
|---|---|---|---|---|
| Standard contingency hire | $120,000 x 20% | $24,000 | 1 | $24,000 |
| Three identical hires | $120,000 x 20% | $24,000 | 3 | $72,000 |
| Mid-level volume hire | $100,000 x 15% | $15,000 | 5 | $75,000 |
| Retained executive search | $150,000 x 30% | $45,000 | 2 | $90,000 |
Two details in the table are worth pausing on. First, volume does not change the per-hire fee unless the rate itself is renegotiated: five hires at 15% cost $15,000 each, and the $75,000 total is just multiplication, not a discount. If an agency offers a volume rate, confirm the lower percentage in writing and enter that rate in the calculator rather than assuming the total will come down on its own. Second, the retained example uses total cash as its base. A $150,000 base salary with a $30,000 guaranteed bonus is a $180,000 fee base at 30%, or $54,000 per hire, not $45,000. That $9,000 gap per hire is exactly the fee-base question to settle before signing.
The guarantee changes the economics after the hire, too. Under a straight pro-rata refund on a 90-day guarantee, a $24,000 fee for a hire who leaves on day 30 refunds $16,000 and keeps $8,000, because 60 of the 90 guaranteed days remain. Many agreements instead offer a free replacement search with no refund at all. The calculator gives you the headline fee; the guarantee clause decides how much of it is truly earned, so read that clause with the same care as the percentage.
What most fee guides leave out
Fee percentage tables tell you the price of the introduction. Four contract terms decide what that price actually buys.
- Guarantee periods. Most contingency agreements include a 60 to 90-day replacement guarantee: if the hire leaves, the recruiter replaces them free or refunds a prorated fee. A cheap fee with no guarantee can cost more than a standard fee with one.
- Prorated refunds. Check whether the guarantee is a free replacement, a sliding refund, or both, and what triggers each.
- Exclusivity and off-limits. Retained agreements often bar the firm from recruiting out of your company for a period. Contingency terms rarely do.
- Payment timing. Contingency fees invoice on start date (sometimes net-30). Retained fees split across engagement, shortlist, and placement, which changes cash flow even at the same headline rate.
Negotiating? Volume commitments, exclusivity, and shorter guarantee windows are the three levers that actually move the rate. Candidates weighing an offer that came through a recruiter should also read our salary negotiation calculator guide, since the fee comes out of the employer's pocket, not the candidate's. And if you are splitting commissions internally on the placement, the 80/20 salary calculator models common desk splits.
Frequently asked questions
The employer pays. Placement fees are a hiring cost borne by the company, and several regulations restrict shifting them onto the worker. Candidates should never be asked to pay a placement fee for a standard employment role.
For contingency placements, 15-25% of the hire's first-year base salary is standard, with 20% the most common benchmark. Retained executive searches run 25-35% of total cash compensation.
Contingency recruiters are paid only when a hire is made, with no upfront cost. Retained firms work exclusively on the search and are paid in installments (engagement, shortlist, placement), which suits senior and hard-to-fill roles.
Often, yes. Volume commitments, exclusivity, shorter guarantee periods, and narrower role bands are the usual levers. Flat-fee arrangements are common where salaries fall in a predictable range.
A window, typically 60-90 days after the start date, during which the recruiter will replace a hire who leaves (or refund a prorated fee) at no extra charge. Always confirm whether yours is a replacement, a refund, or both.
No. Temp and contract staffing uses an hourly markup, typically 35-50% on the worker's pay rate, billed on every invoice for the assignment's duration. There is no single placement fee moment.
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References
- LegalClarity. “What Are Placement Fees and How Are They Calculated?” LegalClarity: Placement Fees (Accessed Oct 18, 2026).
- U.S. Bureau of Labor Statistics. “Occupational Employment and Wage Statistics.” BLS: Occupational Employment and Wage Statistics (Accessed Oct 18, 2026).
- U.S. Bureau of Labor Statistics. “Employer Costs for Employee Compensation.” BLS: Employer Costs for Employee Compensation (Accessed Oct 18, 2026).
- U.S. Bureau of Labor Statistics. “Employment Projections.” BLS: Employment Projections (Accessed Oct 18, 2026).
- Pinpoint. “Recruitment Agency Commission Structures Explained.” Pinpoint: Agency Commission Structures (Accessed Oct 18, 2026).
- Leonar. “Recruitment Agency Fees: 15-30% of Salary.” Leonar: Recruitment Agency Fees (Accessed Oct 18, 2026).
- TechNeeds. “How Much Commission Do Recruiters Make? A Step-by-Step Guide.” TechNeeds: Recruiter Commission Guide (Accessed Oct 25, 2026).
- Refery. “How Much Do Independent Tech Recruiters Make?” Refery: Independent Recruiter Earnings (Accessed Oct 25, 2026).
- U.S. Department of Labor. “Wages and the Fair Labor Standards Act.” DOL: Wages and the Fair Labor Standards Act (Accessed Oct 25, 2026).
- U.S. Department of Labor. “Employment and Training Administration.” DOL: Employment and Training Administration (Accessed Oct 25, 2026).