Pricing is the conversation every recruiter dreads. Here's a clear breakdown of contingency, retained, and hybrid fee structures - with practical guidance on when to use each.
Pricing a recruitment engagement is one of the conversations agency owners consistently underprepare for. The instinct is to match the market rate, avoid losing the business, and deal with the margin implications later.
The result: a contingency engagement that runs for three months, produces a shortlist that the client does not move on, and generates zero revenue. This is not a bad client — it is a bad commercial structure.
Here is a clear breakdown of the three fee models, when each is appropriate, and how to have the pricing conversation without immediately discounting.
In contingency recruitment, the agency is paid only on successful placement. The fee is typically 15-25% of the candidate's first-year salary.
The appeal for clients: zero upfront commitment. Pay only for results.
The reality for agencies: contingency search is a market bet. You invest time and resources against a probability of payment. If the client hires internally, uses another agency, or abandons the search, you receive nothing.
For high-volume roles with clear requirements and fast decision cycles, contingency is appropriate. The turnaround is fast, the candidate qualification is relatively straightforward, and the probability of placement justifies the risk.
For senior roles (above €80-100k salary), complex searches, or clients who have a history of slow decision-making: contingency search is financially dangerous. You are committing significant senior recruiter time against an uncertain outcome.
The mistake agencies make: taking contingency mandates for senior roles because they are afraid to ask for a retainer. The fear is losing the client. The real risk is investing 40+ hours on a search that pays nothing.
In retained recruitment, the client pays a portion of the fee upfront, typically in three installments: on engagement, on shortlist delivery, and on placement. The total fee is usually 25-33% of first-year salary.
The appeal for agencies: guaranteed revenue regardless of outcome, commitment from the client, and the ability to invest properly in the search without writing off resources if the client moves slowly.
The appeal for clients: your full attention and accountability. A retained agency is running your search exclusively. A contingency agency is running your search alongside fifteen others, prioritizing whichever roles are closing fastest.
The conversation that needs to happen: "This is a senior role with a complex profile. To do this properly — market mapping, confidential outreach, structured evaluation — I need a retainer. That means one third on engagement, one third on shortlist, one third on placement. If we do not place, you keep the shortlist and I return the first installment. Here is why that is in your interest."
Most clients who push back on retainers have not had the economics explained clearly. A recruiter who is fully committed to their search, because they have already been paid for part of it, is a better investment than five contingency recruiters who will deprioritize the role the moment something easier comes along.
Hybrid structures typically involve a smaller upfront commitment (a "research fee" or "engagement fee" of €2,000-5,000) with the remainder paid on placement. This is not a full retainer — it is a commitment filter.
The purpose: screening out clients who are not serious. A client who will not pay €3,000 to engage will also not move quickly, provide timely feedback, or prioritize the search. The €3,000 is not primarily about the money — it is about commitment.
Hybrid is useful for:
If you cannot track placement fees, retainer installments, and billed-versus-collected revenue per client in your ATS, you are running your agency's financial operations in a spreadsheet alongside your recruiting operations.
Pickr tracks placement fees, fee structures, and billing status per role and per client. When you close a placement, the placement record captures the fee, the structure, and whether each installment has been invoiced and paid.
Contingency fees are typically 15-25% of first-year salary. Retained fees are typically 25-33% of first-year salary, paid in installments. The higher retained fee reflects the exclusive commitment and upfront investment the agency makes.
For any senior role (typically above €80-100k), complex searches requiring market mapping and confidential outreach, clients with a history of slow decision-making, or niche roles with a small candidate market. Contingency is appropriate for high-volume, fast-cycle roles with clear qualification criteria.
The conversation needs to explain what the retainer buys — exclusive attention, proper market mapping, structured evaluation — and what contingency search means for a senior role (the agency is one of several, prioritizing faster closes). Most clients who understand the difference choose retained for senior roles.
Increasingly common, particularly in markets transitioning from contingency to retained models. A €2,000-5,000 engagement fee filters out uncommitted clients and funds the initial research phase, while keeping the risk-sharing model that clients are comfortable with.
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Start free audit →Andreas Gruber
Founder of Pickr and ScalingPPL. Former recruiter who placed engineers and operators into European startups and scale-ups for four years before building the tool he wished had existed.