The 5 recruitment fee models (and when to use each)

Almost every recruitment agency charges the same way: a percentage of the annual salary when the candidate signs. It works, but it leaves money and predictability on the table. There are five fee models, and each one solves a different cash-flow and risk problem.

1. Contingency

The default model. You get paid only if you place the candidate, usually 15% to 25% of the gross annual salary. The client risks nothing; you risk all the sourcing work.

When to use it: new clients, roles with a deep candidate pool, when you're competing against other agencies for the same opening.

The problem: your income depends on closing. A month with three rejected offers is a month with no billing, even if you did the same work.

2. Retained

The client pays upfront, in stages. A common pattern: one third on signing, one third on the shortlist, one third on placement. The total fee is usually higher (20%–33%) because the client buys exclusivity and priority.

When to use it: executive search, hard or confidential roles, clients you already have a relationship with.

The upside: you bill before you place. The risk of a candidate falling through is shared with the client.

3. RPO (monthly capacity fee)

You don't charge per placement; you charge to run the function. A fixed monthly fee covers a number of roles or a dedicated team. The client buys capacity, not one-off results.

When to use it: clients with 10 or more open roles on a sustained basis, expansions, plant openings.

The upside: recurring, predictable income. The problem becomes operations and reporting, not closing.

4. Close fee

A flat amount per placement, independent of salary. For example, $3,000 per hire, whether the role pays 40,000 or 90,000 a year.

When to use it: volume recruiting for homogeneous profiles (call center, retail, operations), where a percentage would be too low or too high depending on the role.

The upside: the client knows exactly what each hire costs. Easy to budget for both sides.

5. Open fee

A small payment when the search starts, credited against the final fee if there's a placement. It covers the cost of kicking off sourcing and filters out clients who are just "exploring".

When to use it: as a layer on top of contingency, for roles where sourcing is expensive and the client has a habit of cancelling searches halfway.

The upside: it reduces unpaid work without asking the client for the full commitment of a retainer.

Which model for which situation

Billing all five from one place

In Klyver, each fee model lives inside the pipeline. When the candidate reaches offer, the pre-invoice generates with the fee calculated per the model you set for that client, with per-country taxes and a branded PDF. The client approves it with a link. There's no separate invoicing module and no Excel file with each account's terms.