“How much do you charge?”
This is the number one question businesses ask when they’re shopping around for a staffing agency.
And what’s the number one answer? “It depends.”
This article breaks down how staffing agency pricing works, and how these factors affect how much your business will pay for recruiting services.
Staffing agencies take the following factors into account when determining their fees:
- How much the worker will be paid
- How many qualified applicants live and work in the area
- Workers’ compensation premiums for the job
- The number of workers the client needs
1) How much will the worker be paid?
The most important factor in how a staffing agency calculates its fees is how much the worker will be paid. That’s because many staffing agencies collect their service fees based on how much and how often the worker is paid.
It’s also because the wage on offer has to be high enough to encourage qualified workers to apply.
2) How many qualified applicants live and work in the area?
Scenario #1. A company needs an entry-level warehouse worker, and the company is located in a major city.
Scenario #2: A company needs an experienced master electrician, and the company is located in a rural area with a very small labor pool.
In Scenario #2, a staffing agency will have to put more resources into finding a qualified worker. So the agency will charge the client a higher service fee than in Scenario #1.
3) How much are workers’ comp premiums for the job?
Staffing agencies – just like any other employer – have to pay workers’ comp insurance premiums for every worker. Workers’ comp rates are determined by the state and by insurance carriers.
A staffing agency will charge a higher service fee to place a worker in a “safe” job (like a data entry clerk) than to place a worker in a more hazardous job (like a commercial construction worker).
4) How many workers does the employer need?
Volume affects the price of physical goods. If a business buys 10,000 widgets, that business will generally pay a lower price per widget than if it had purchased just 10.
Staffing agencies work the same way. If a company requests 30 warehouse workers, the staffing agency’s service fee (per worker) will generally be lower than if the company had requested just 1 warehouse worker.
Pricing based on volume also applies to the duration of a worker’s assignment. A staffing agency will generally charge a higher service fee (per hour) for a worker who’s going to be on the job for a single day than it will for a worker placed in a long-term position.
Make it easy to get a quote from a staffing agency
Now you know the questions a staffing agency rep will ask before he or she can answer that all-important question: “How much do you charge?”
To make it easy to get a price quote from a recruiting firm, download the free Staffing Agency Pricing Guide. Fill out the Price Guide and give it to your staffing agency rep to get a quote fast.
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