An argument for value-based fee structures – from an agency recruiter’s point of view
As recruitment agency professionals, we’ve all heard the jokes. “So you get paid just for sending a CV?” Or the classic, “Why is your fee 20%? That seems a bit steep for just introducing someone.” These comments are not only frustrating, they reveal a deeper misunderstanding of what we actually do — and more importantly, the value we deliver.
It’s time we, as recruiters, start making the case for a shift in how we’re compensated. Not just for our own benefit, but to improve outcomes for clients and candidates alike. And that means moving away from the outdated contingency-only model and towards something more reflective of other professional services — like law or financial advice — where expertise, time, and outcomes are properly recognised and paid for.
The Problem with Contingency-Only
Let’s be honest: the contingency model is broken. As it stands, many recruiters are expected to:
- Compete with multiple agencies (often with no guarantee of exclusivity),
- Invest hours into sourcing, screening, and managing candidates,
- Act as a career adviser, employer brand ambassador, and negotiation consultant…
…all for free unless the placement actually happens.
If any other professional – solicitor, accountant, financial adviser – was asked to do hours of skilled, consultative work with no guarantee of payment, they’d laugh you out of the room. And yet, in recruitment, it’s still the norm.
This model doesn’t just devalue recruiters; it leads to rushed processes, surface-level candidate engagement, and ultimately poorer hires. When a recruiter is only paid for a successful placement, the incentive becomes speed, not strategy. That’s not good for the client, the candidate, or the recruiter.
The Case for Value-Based Fees
Other industries have already figured this out. Lawyers charge by the hour or by project. Financial advisers structure fees around the complexity of the service and the value provided. Why should recruitment be any different?
We’re not just CV-slingers. We’re market experts, brand advocates, consultants, and strategic partners. We bring deep networks, candidate insights, and real influence over hiring outcomes. The right recruiter can quite literally transform a business — or save it from making a costly hiring mistake.
This is value, and it should be priced accordingly.
A value-based fee model considers factors like:
- The complexity of the role or market,
- The level of seniority or scarcity of the talent required,
- The consultancy and strategic input provided (e.g., salary benchmarking, job spec redesign, EVP advice),
- The long-term impact of the hire.
Under a model like this, recruiters are rewarded not just for placing a candidate, but for the quality and longevity of that placement, and the strategic input they provide along the way.
What Might This Look Like in Practice?
There are a few ways we can start to shift towards a more sustainable, value-driven model:
1. Retained or Staged Payment Structures
Just like solicitors request an upfront fee or work on a retainer, many recruiters propose structured payments — for example:
- 1/3 upfront on role briefing and market mapping,
- 1/3 on candidate shortlist submission,
- 1/3 on successful placement.
This ensures both parties are invested, and it reflects the ongoing work done even before a placement is made.
2. Project-Based Fees
Similar to financial advisers who price per service or deliverable, recruiters can price based on a full hiring project. This might include candidate mapping, EVP consulting, interview process design, and talent pipelining — regardless of whether a hire is made within a set timeframe.
3. Performance or Outcome-Based Bonuses
Recruiters could negotiate bonus structures tied to key performance indicators — e.g., candidate retention at 6 or 12 months, reduced time-to-hire, or diversity outcomes. This incentivises long-term thinking and deeper partnerships. This one’s a bit controversial but still an idea.
4. Exclusive Partnerships
Work exclusively with clients on key roles in exchange for reduced fees or added services. This model allows for deeper investment from both sides and usually leads to better hiring outcomes. If you don’t have this option in your terms, you are crazy – make it easy (and cheaper) for the client to work exclusively with you). And if you’re delivering value, exclusivity becomes a no-brainer.
Can this really work?
Yes, I can give you a case study of a specialist agency that modified their terms of business to firstly only offer a retained model and their recruiters were trained to deliver this and explain the benefits to clients. There was also an option that if the client didn’t want to pay a retainer they could list the role exclusively and receive a discount to the fee. This business saw an increase in fillable roles and an increase in gross revenue of 23% in 12 months,
So, Should Recruiters Be Paid Like Lawyers?
Absolutely — if not better (we’re more fun, after all). Like lawyers or financial advisers, we solve high-stakes problems. We reduce risk. We offer tailored advice. And when done right, our work drives real, measurable business results.
It’s time we stop undervaluing our own profession and start educating our clients on the real worth of what we bring to the table.
Value-Based Fees: Practical Steps
If you’re ready to shift towards a value-driven model, here’s where to start:
- Educate Your Clients – Show them what goes into the recruitment process behind the scenes. Break it down like any other service would.
- Start with Hybrid Models – Test the waters with staged payments or partial retainers.
- Quantify Your Impact – Track metrics like time-to-fill, retention rates, and hiring manager satisfaction, and use these to justify fees.
- Change the Conversation – Position yourself as a consultant, not a service provider. Use your market knowledge and insights as currency.
- Be Selective – Work with clients who value quality and partnership. Walk away from contingency races to the bottom.
Final Thoughts
We’re not just middlemen in the hiring process. We’re professionals with deep expertise, unique insights, and the ability to shape careers and companies. It’s time our compensation reflected that.
So yes, recruiters should be paid like lawyers. Because what we offer isn’t just a service — it’s a strategic investment. And when we price ourselves accordingly, everyone benefits.
Written by Adele Last
Adele Last is a prominent figure in the Australian recruitment industry and the founder of Career Lasso, a pioneering training platform designed to introduce and upskill new talent entering the world of recruitment. Since launching the initiative in 2019, Adele has focused on bridging the gap between interest and industry, delivering a structured program that equips participants with core recruitment skills across sourcing, advertisement writing, sales, and commercial basics.
She is also the co-host of the Recruitment News Australia weekly podcast, where she offers insights into industry trends, challenges, and stories from the field. In addition to her training and media work, Adele operates as a fractional GM, advising recruitment businesses on strategy, performance, and operational leadership. Through her work, Adele continues to champion innovation and accessibility in recruitment, helping shape the next generation of recruiters.
