Pricing Models for Recruitment Agencies in the UK

Pricing Models for Recruitment Agencies in the UK

If you’re running a recruitment agency — or thinking about starting one — figuring out how to set your prices is a big deal.
Charge too little and you’ll struggle to stay profitable. Charge too much and you risk scaring clients away.

There’s a simple way to approach it though — it’s called the Pricing Tripod.
Basically, it helps you find the sweet spot by balancing three things:

  • Cost – What it costs you to deliver the service

  • Competition – What your competitors are charging

  • Value – What your service is actually worth to the client

Get all three right, and you’ll set prices that clients are happy to pay — and that leave you with healthy profits.

Let’s break it down properly with real numbers, depending on the type of recruitment service you’re offering.

1. Permanent Placements

Permanent placements are the bread and butter for a lot of agencies.

How the Costs Work:

Your main costs here are time and tools:
Writing ads, headhunting, screening CVs, interviewing, CRM software (like Chameleon-i), and general admin.

On average, agencies in the UK spend somewhere between £500 and £1,000 per successful placement.

What Competitors Charge:

In the UK, fees for permanent placements usually sit around 15% to 30% of the candidate’s first-year salary.
Higher if the role’s niche, or hard to fill.

The Value to the Client:

You’re not just handing them a CV — you’re solving a big problem: finding someone who can help their business grow.

Quick Example:

You place someone earning £40,000.

You charge 20% — that’s £8,000.

If your cost to deliver was £1,000, your profit is £7,000.
(And no, you don’t need to feel guilty about it. You saved the client dozens of hours of work.)

Tips for Pricing Permanent Roles:

  • Avoid big discounts — Instead, offer extra value, like a free replacement guarantee if the candidate leaves within 90 days.

  • Specialized roles — If you're filling rare or technical roles (like cybersecurity, AI, or CFOs), don’t be afraid to charge at the higher end (up to 30%).

2. Temporary and Contract Staffing

Temps and contractors are a different game — and they can be super profitable if managed right.

How the Costs Work:

You’re covering things like:

  • Worker wages

  • Employer contributions (NI, pension)

  • Admin time

  • Insurance

And, of course, you’ve got your own overheads on top.

What Competitors Charge:

Most UK temp agencies add a markup of 15% to 25% on top of the worker’s hourly or daily wage.

Some sectors (like healthcare or legal) might go even higher because clients need temps urgently.

The Value to the Client:

Speed and flexibility.
Clients need workers now, without all the paperwork and hassle.
They’ll happily pay a premium for it.

Quick Example:

You place a warehouse temp at £12/hour.

You add 20% — so the client is charged £14.40/hour.

Over a 40-hour week, that’s:

  • £96 extra revenue per week

  • Over 4 weeks, £384 extra

If your admin and payroll costs are about £50 a week, you’re left with around £184 profit for that month.

Tips for Pricing Temps:

  • Offer volume discounts if clients need lots of temps at once — but make sure your margins still work.

  • Charge a rush fee if they need someone urgently, especially at crazy notice (like same-day fills).

3. Executive Search

This is where the serious money is — but also where you put in serious effort.

How the Costs Work:

Executive searches involve:

  • Deep research

  • Head-hunting passive candidates

  • Extensive screening

  • Sometimes flying to meetings, attending panels, etc.

Easily costs you £2,000 to £5,000 per search in time and resources.

What Competitors Charge:

For C-level roles, it’s normal to charge 25% to 40% of the candidate’s first-year salary.
Some charge a fixed fee (e.g., £30,000+) depending on how senior the hire is.

The Value to the Client:

Top talent transforms companies.
You’re not just filling a gap — you’re helping shape the future of their business.

Quick Example:

You find a CFO for £120,000 salary.

You charge 30% — that’s £36,000.

If you spent £5,000 on the search, your profit is £31,000.

(And yes, it’s worth it — good CFOs add millions to a company’s bottom line.)

Tips for Executive Search Pricing:

  • Retainers work best — Ask for part payment upfront to lock in commitment.

  • Success-only fee — You can charge more if you only get paid when the hire is made (risk = premium).

Bonus Tip: Use Software to Make Pricing Smarter

Trying to keep track of costs, competitors, and client deals in spreadsheets?
You’ll lose money somewhere.

Recruitment software like Chameleon-i makes it 10x easier:

  • Tracks time and billable hours

  • Helps you see real margins on placements

  • Auto-invoices clients

  • Tracks competitor pricing data

The faster you can see your costs and profits clearly, the faster you can adjust your pricing when needed.

Final Thoughts: How to Get Pricing Right

✅ Cover all your costs — not just salaries, but everything (ads, tech, admin, etc.)
✅ Watch your market — know what others are charging, but don’t blindly copy them.
✅ Charge for your value — if you save clients time, money, and headaches, that’s worth serious money.

And remember:
Pricing isn’t set in stone.
Check your numbers every few months and tweak if needed.
If you’re delivering great candidates, companies will pay your fees without blinking.

With the right pricing — and smart tools to back you up — your recruitment agency can grow faster (and stress less).