Recruitment agency fees can quietly become one of the largest discretionary expenses in a growing organization. While agencies provide real value, traditional pricing models often inflate costs—especially for companies hiring multiple roles per year.
The solution isn’t eliminating recruiting support. It’s changing how you pay for it.
If you want to reduce recruitment agency fees without sacrificing quality or hiring speed, the key is shifting away from percentage-based pricing.
Why Recruitment Agency Fees Escalate Quickly
Most companies rely on one of two traditional models:
Contingency Recruiting
- 20–30% of first-year salary
- Paid only upon hire
- Incentivizes speed and placement volume
Retained Search
- 30–40% of first-year salary
- Paid in installments, often upfront
- Common for executive and leadership roles
For a $100,000 role, that’s $20,000–$40,000 per hire.
For a $150,000 role, fees often exceed $45,000.
Multiply that across multiple hires and recruiting quickly becomes a six- or seven-figure line item.
The Structural Problem
Traditional recruiting fees are tied directly to compensation. That means:
- Agencies benefit when salary increases
- Costs rise automatically as roles become more senior
- You pay more even if the search effort is similar
You’re effectively paying a percentage tax on talent.
The Real Issue Isn’t Talent—It’s Flexibility
Most hiring teams don’t need full end-to-end recruiting support all the time.
Often, companies need targeted help with:
- Role definition and job description refinement
- Market salary benchmarking
- Pipeline sourcing support
- Resume screening
- Interview coordination
Traditional agency models don’t allow partial engagement. You’re locked into a rigid structure regardless of scope. That lack of flexibility is what drives unnecessary recruitment agency fees.
A Smarter Way to Reduce Recruitment Agency Fees
A time-and-materials recruiting model shifts pricing from compensation-based to effort-based.
Instead of paying 30% of salary, you pay for actual recruiting hours.
Example Structure
- $175 per hour
- ~60 hours per search
- Pass-through cost for job postings only
This equates to approximately $11,500 per hire versus $45,000 under a traditional retained model.
Why This Works
- Salary-neutral pricing — No incentive to inflate compensation
- Transparent economics — Clear visibility into hours and progress
- Flexible scope — Cap, pause, or adjust the search as needed
- Cost control — Predictable budgeting
- Better for repeat hiring — Ideal for companies hiring multiple similar roles
Modern sourcing platforms and AI tools have level access to talent. The premium historically charged for “network access” is no longer justified in many searches.
What the Financial Impact Looks Like
Here’s a real-world comparison for a company hiring 10 roles per year at $150,000 average salary:
Annual Cost Comparison
| Model | Cost Per Hire | Annual Cost |
| Retained (30%) | $45,000 | $450,000 |
| Time & Materials | $11,500 | $115,000 |
| Annual Savings | — | $335,000 |
3-Year Impact
- Retained: $1,350,000
- Time & Materials: $345,000
- 3-Year Savings: $1,005,000
For a private equity-backed company operating at an 8× EBITDA multiple, that $335,000 in annual savings translates into approximately $2.68 million in enterprise value creation.
Reducing recruitment agency fees directly improves margin and valuation.
When This Approach Makes the Most Sense
A time-and-materials recruiting model is particularly effective when:
- You hire 5+ roles annually
- You want cost predictability
- You are EBITDA-focused
- You operate in a PE-backed environment
- You value transparency and flexibility
- You are scaling a consulting or services business
Retained search still has a place for CEO searches or highly confidential executive transitions. But it should not be the default for repeat hiring needs.
Better Outcomes, Not Just Lower Fees
Lower recruitment agency fees shouldn’t mean lower hiring quality.
In fact, flexible recruiting models often improve outcomes because they:
- Integrate more closely with internal teams
- Adapt quickly to changing hiring priorities
- Align incentives around execution—not compensation size
- Encourage disciplined, data-driven hiring processes
Instead of paying a premium per hire, you build scalable recruiting capability.
The Bottom Line
If your organization defaults to contingency or retained recruiting for every role, you’re likely overspending.
Reducing recruitment agency fees isn’t about cutting corners. It’s about aligning your recruiting model with how modern businesses actually hire: dynamically, strategically, and with accountability.
Rethink the model—and you can protect both hiring quality and your bottom line.
Want to discuss how you can reduce recruitment agency fees while at the same time find the best talent? Interested in how this can work for your organization? Reach out to Empirical Managing Partner, Jason Fisher, at jason@thinkempirical.com to explore a more flexible recruiting approach.
