Placement Fee Calculator: Recruiter Fee and Split Placement Share

What is a placement fee?

A placement fee is what an employer pays a recruiting agency when it hires a candidate the agency introduced. For direct hire roles it is usually a percentage of the candidate's first year base salary. A 20% fee on a $95,000 salary is $19,000.

Most agency fees are contingent, meaning the client pays only if they hire your candidate. Retained searches split the fee into installments paid during the search. Some firms charge a flat fee instead of a percentage, which is common for high volume or lower salary roles.

In a split placement two recruiters share the fee. One holds the job order and the client, the other supplies the candidate. They agree the division before anyone is submitted, often an even split, and each firm then pays its own recruiter commission from its share.

The fee pays for work the client cannot see: the search, screening, references, offer negotiation and the guarantee if the hire leaves early. When a client pushes on the percentage, it helps to explain that work in plain terms rather than defend the number alone.

How do you calculate a placement fee step by step?

Invoice on the start date, not the acceptance date, unless your terms say otherwise. A candidate who accepts and never starts usually means no fee.

1. Read your signed fee agreement for the fee percent and what counts as salary.
2. Take the first year base salary from the accepted offer. Add sign on bonus or target bonus only if the agreement says so.
3. Multiply the salary by the fee percent and divide by 100.
4. If the placement is a split, multiply the total fee by your agreed share percent.
5. Subtract your share from the total to get your partner's share.
6. Note the guarantee period and refund or replacement terms before you count the fee as earned.

What does a worked placement fee example look like?

You place a senior accountant at $95,000 base salary under a 20% fee agreement. The total fee is $19,000. The candidate came from a split partner and you agreed an even split, so each side receives $9,500.

The table shows how fee percent and split change the numbers on the same salary. If you held both the job order and the candidate, your share would be the full fee.

What is a typical placement fee percentage?

Published, checkable fee data is thin. One source is Top Echelon, which runs a split placement network and publishes averages from placements made inside it. For 2018 it reported an average fee of 21.5% on an average starting salary of $93,407, for an average fee of $20,283. Its 2013 figures were 22% on $93,006, or $20,720. The rates varied by field in 2018, from 20% in sales and marketing to 23% in engineering.

Those numbers come from one network of agencies and are several years old, so treat them as a reference, not a market rate. Fees in your niche depend on salary level, how hard the role is to fill, whether the search is exclusive or retained, and what your client has agreed with other agencies.

Your fee agreement is the only number that counts. Get it signed before you submit anyone.

Watch the salary side too. A higher salary at the same fee percent raises your fee, so helping a candidate negotiate fairly is usually aligned with your interest, as long as the offer stays within the client's approved range.

How do you protect your placement fees?

Keep a simple record of every fee agreement, its renewal date and any special terms. Old agreements with outdated rates are a common source of disputes.

• Get a signed fee agreement before you send a single profile.
• State what counts as salary, when the fee is due and how long the guarantee lasts.
• Record each submittal with a date and the client's acknowledgment, so ownership is clear.
• Agree split terms in writing, including who handles a fall off and any replacement.
• Stay close to the candidate between acceptance and start, when counteroffers hit.
• Chase invoices from day one of the payment terms, not day 60.

How does a placement fee turn into recruiter commission?

The placement fee goes to the agency, not the recruiter. Each firm then pays its recruiters from the fee under its own commission plan. Common plan types include a flat percentage of every fee, tiered percentages that rise once a recruiter passes a billing threshold, and a draw against commission.

In a split, commission is paid on your firm's share only. If the total fee is $19,000 and you take half, your firm has $9,500 to work with, and your commission comes out of that. Many firms also split credit internally when one recruiter owns the client and another owns the candidate.

Most plans pay commission only after the client pays the invoice, and some hold it until the guarantee period ends. If the candidate leaves during the guarantee, the firm may refund part of the fee or owe a free replacement, and the commission is often clawed back. Read those terms before you count any fee as yours.

Use the calculator to see how fee percent and split terms change your share before you agree them. A few points on the fee, or ten points on a split, can matter more over a year than one extra placement.

Keep fee terms consistent across clients where you can. Exceptions are hard to track and easy to forget.

What placement fee mistakes should you avoid?

• Quoting a fee verbally and never getting the agreement signed.
• Assuming bonus is included in salary when the agreement says base only.
• Agreeing a split percentage after the candidate is placed, which invites disputes.
• Discounting the fee to win a client, then struggling to raise it later.