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Variable fee versus Fixed Fee Which one to choose

Variable fee vs Fixed Fee. Which one to choose?

There are a variety of collection systems in the world of recruitment agencies, so it’s normal to get overloaded if you’re starting to try to outsource your recruitment.

It is for this reason that in today’s article we explain two of the most common payment systems; the fixed fee or “fixed fee” and the variable fee “variable fee”. These two methods are the most used by agencies and headhunters in permanent hiring of specialized profiles and/or command positions.

Variable fee or fixed fee?

  • Variable payment (variable fee): Recruiters or the agency receive a percentage of the annual gross salary of the hired candidate. Therefore, the higher the wage, the higher the rate. The average is 15%, although in the case of senior managers this figure can be between 20% and 30%.
  • Fixed payment (fixed fee): The customer and provider set a price before starting the search. As in the previous case it is a percentage of the annual brutal remuneration, but based on a reference salary, that is the usual remuneration of the position offered. The percentages in this case are the same as in the variable fee or even slightly lower payments can be negotiated.

Another characteristic to take into account the fixed payment is that it is more common for the remuneration to be made in instalments, usually following the following structure:

  • Payment and signal
  • Payment according to previously agreed delivery terms.
  • Final payment after hiring

What do prices depend on?

The cost of hiring a recruitment agency will depend on multiple factors, but here are the most important ones:
  • Number of hirings
  • Demographic and labour market characteristics.
  • Degree of complexity and specialization of the positions to be covered.
  • Duration of contracts between customer and supplier.
  • The gross annual salary of the position offered.

Take care of your relationship with your recruiter

The best way for an outsourcing process to end successfully is to establish a balanced customer-supplier relationship. It is necessary to generate a fair agreement for both parties, in which the company that contracts outsourcing does not pay more than it should and where the recruitment agency or recruiter does not receive less than what their work and their time cost.

This is the only way to align goals and get the best talent for your company. As this step is very important, I recommend you read these articles:

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