Pricing placement fees when the catalogue has none
The Recruiting pack's starter items carry no prices. How an agency sets its own placement, search, temp and contractor rates, and where they post.
By Achekam · · 5 min read · For Recruitment businesses in South Africa, Nigeria, Kenya
Launching soon. The Industry CRM add-on described in this article is launching soon. This article describes it as it will work at launch.
When an agency switches on the Recruiting & staffing pack, the catalogue fills with the things a recruiter sells: permanent placement fees, retained search, assessments, temporary staff by the hour and contractors by the day. Every one of those items arrives without a price.
That surprises people who expect software to come with suggested rates. It is deliberate. No starter item in any of Achekam's industry packs carries a price, and a pack that tried to ship one would be refused. Your fees are a commercial decision that depends on your market, your clients and your terms of business, and a number typed in by a software company would be wrong for most agencies and dangerous for some.
This article explains what the starter items are, how to turn them into your own price list, and how each one finds its way into your books.
Unpriced starter items
The Recruiting pack's starter catalogue lists five kinds of item:
| Starter item | What it usually represents |
|---|---|
| Permanent placement fee | The fee when a candidate you introduced is hired |
| Retained search | An assignment paid for in stages, whether or not you fill it |
| Assessment | Testing or assessing candidates for a client |
| Temporary staff per hour | Hours worked by your temps, billed to the client |
| Contractor per day | Day rates for contractors you supply |
The catalogue posts to two revenue accounts: Placement fees (4560) and Temporary staffing revenue (4570). Open each item and check which of the two it names before you start invoicing. If your accountant wants assessments or retained search reported on their own lines, raise that early, not after a year of history has built up in one account.
Placement fees, retained search, assessments, temps and contractors
Each line in that table is priced in a different way, and it helps to decide the basis before you decide the number.
Permanent placements. Agencies commonly charge a share of the candidate's first-year package, a flat fee per role, or a mix of the two with a minimum. The catalogue item is the same in each case; what changes is how you work out the amount on each quotation. Investopedia's explanation of what a headhunter is and how they are paid describes the contingency model many recruiters use, and is a useful starting point for a new agency setting its basis.
Retained search. A retained assignment is usually split into instalments, for example on engagement, on presenting a shortlist and on appointment. Decide whether each instalment is a share of an estimated total fee or a fixed amount, and what happens to the total if the final package differs from the estimate.
Assessments. Often priced per candidate or per assessment type, sometimes bundled into a placement fee. If you sometimes give them away to win a search, record them at your price with a discount rather than at nothing, so you can see what the free work cost you.
Temporary staff per hour. The hourly charge has to cover the temp's wage, statutory employer costs in your country, and your margin. Build the rate up from those parts for each role, rather than adding a flat mark-up to every wage.
Contractors per day. Day rates depend on whether the contractor is on your payroll or invoices you, and on who carries the risk if the client cancels days. Settle that in the contract before you price.
Setting your own rates
You set the prices; the pack never suggests one. A workable approach:
- Write down your fee basis for each item in your terms of business first.
- Agree standard rates with the directors, and decide who may quote below them.
- Enter the standard prices on the catalogue items.
- Use the quotation to tailor the fee for each client, so the agreed figure is recorded against that vacancy.
- Review the rates once a year against what clients actually accepted.
Quotations in the pack carry the price to the client. A client can accept a quotation on a link by typing their name and ticking a box, and that acceptance drafts the invoice in receivables. How that works is covered in accepting a fee quote online.
Each line naming its revenue account
With the Industry CRM, an invoice line names the revenue account and the product it sells. When the invoice is issued, revenue is posted per account, and any cost of sales goes in the same journal.
For an agency, the practical result is a clean split in your income statement between placement income and temp income, as long as each item names the account you expect, and nobody has to recode invoices at month end. If a consultant picks the wrong catalogue item, though, the revenue lands in the wrong account, so make the item names in your catalogue unmistakable. The route from invoice to ledger is described in more detail in posting placement fees to the ledger.
Accounts added to your chart on activation
Switching on the Recruiting pack adds its revenue accounts to your chart of accounts and its unpriced starter items to the catalogue. You do not have to create Placement fees or Temporary staffing revenue yourself.
One thing to check first. If an account code the pack needs is already used in your chart for a different type of account, activation is refused, and the message names the account concerned. Agencies that built their own chart, or migrated from another system, should ask their accountant to look at the codes before activation day, so the switch-on is not held up.
A sensible order of work, then: agree your fee basis, clear any account-code clash with your accountant, activate the pack, and price each starter item before the first quotation goes out. Rebates under the guarantee period in your terms do not change the catalogue price; they are dealt with when they arise, so keep the standard price honest and handle the exceptions on the record they belong to.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
