How to calculate your recruitment fee (and stop underselling)

Most agencies charge 12-18%. Top agencies charge 22-25%. The difference isn't experience — it's positioning.

The standard formula — and why it limits you

The standard in LATAM is a percentage of the annual gross salary of the placed candidate. Most agencies charge between 12% and 18%. A few charge 20-25%. The best executive search firms charge 30-33%.

The question isn't what the market charges — it's what you can justify charging.

How to calculate your real cost per placement

Before setting your fee, calculate your actual cost:

• Recruiter time: Hours spent on the search × hourly cost
• Tools: Prorated monthly cost of LinkedIn, ATS, job boards
• Overhead: Office, admin, your own time as founder
• Guarantee provision: 20% of fee for potential replacements

Most agencies discover their cost per placement is $1,500-3,000 USD. At a 12% fee on a $40,000 salary, you're making $4,800 — a thin margin. At 20%, you make $8,000.

The 3 factors that justify a higher fee

1. Specialization

A specialized agency in finance, tech or manufacturing can charge more because they have deeper candidate networks and market knowledge. Clients pay premium for expertise they can't easily replicate internally.

2. Speed

If you consistently close positions in 20 days vs the market average of 45, that's a quantifiable value. A CFO vacancy costs companies $50,000-200,000 per month in unrealized value. Closing it 25 days faster is worth $40,000-165,000 to the client. Your fee is cheap by comparison.

3. Guarantee and process

A structured process with documented feedback, a professional client portal and a 6-month guarantee commands a higher fee than a "we'll send you CVs by email" approach.