Permanent placement fees typically run between 15% and 25% of a candidate’s annual salary when an agency charges on a percentage basis, though fixed-fee alternatives also exist. Before agreeing to any quote, the single most important thing to check is the fee basis: whether the percentage applies to base salary alone or to a broader total remuneration figure that includes superannuation and allowances.
TL;DR:
- At a $90,000 salary, a 20% fee costs $18,000, while a 25% fee costs $22,500; check minimum fees and whether rates are negotiable or tiered.
- A $4,795 flat fee for a $110,000 role remains unchanged as salary rises, while percentage charges increase with the candidate’s pay.
- Agencies may charge upfront engagement fees; retained searches bill in stages regardless of outcome, while contingency agencies charge only after successful placement.
- Contracts can trigger a fee for hiring an introduced candidate within six to 12 months; keep dated records of direct applicants and check guarantee conditions.
Table of Contents
- What permanent placement fees usually look like
- Pricing models: contingency, retained search, flat fee and engagement charges
- Fee basis and worked examples: base salary vs total remuneration
- Payment timing, replacement guarantees and contract clauses to check
- What drives variability in placement fees and how employers can influence cost
- Fixed fees versus percentage-based fees: what the numbers show
- Hidden costs beyond the headline placement fee
- How fixed-fee recruitment works from engagement to placement
- Choosing a recruitment agency: what to check against your needs
- Why predictable fees matter more than employers realise
- A fixed-fee alternative worth comparing before you sign
- FAQ
- Sources
What permanent placement fees usually look like
Most Australian businesses encounter fees calculated as a percentage of the placed candidate’s salary, and the market range is wide enough to catch unprepared employers off guard. Benchmarks commonly cited across the industry sit between 15% and 25% of annual salary, with averages often falling in the 15% to 20% band depending on role complexity and market demand.
Not every agency prices this way. Some offer one-off fixed placement fees instead of a sliding percentage, and others introduce a commitment or engagement fee charged upfront before any candidate search begins, separate to the final placement invoice.
A worked example shows why the percentage matters. For a role with a $90,000 base salary, a 20% fee produces a placement cost of $18,000. At 25%, the same salary produces a $22,500 fee. That’s a $4,500 difference from a five-point shift in percentage alone, before any question of what the percentage is actually calculated against.
Recruitment agency fees typically range from 15% to 25% of salary, a spread wide enough that two quotes for the same role can differ by thousands of dollars.
A few things worth checking before comparing quotes:
- Ask whether the quoted percentage is fixed or negotiable for your volume of hiring.
- Confirm whether the fee is a flat percentage or tiered by salary band.
- Check if there’s a minimum fee regardless of salary, which can distort low-salary placements.
Pricing models: contingency, retained search, flat fee and engagement charges
Recruitment agencies generally use one of four pricing structures, and each suits a different hiring situation.
- Contingency (percentage) recruitment: you pay only on a successful placement, which aligns the agency’s incentive with filling the role quickly, though it can also encourage volume over precision.
- Retained search: typically used for senior, executive or hard-to-fill specialist roles, where the agency is paid in stages regardless of outcome, reflecting the deeper, more exclusive search involved.
- Flat-fee recruitment: a fixed dollar amount agreed upfront, independent of the candidate’s salary, which gives small and midsize employers a predictable cost for budgeting purposes.
- Engagement or commitment fees: an upfront charge some agencies request before starting the search, intended to secure resourcing and reduce the risk of unpaid work on roles that stall or get cancelled.
Engagement fees affect cashflow differently to a single placement invoice. Paying a portion upfront and the remainder on success spreads the cost across the hiring timeline rather than landing as one lump sum at the end, which can suit employers managing tighter quarterly budgets.
Fee basis and worked examples: base salary vs total remuneration
The fee basis is where many employers get caught out, because the same percentage applied to different salary definitions produces very different dollar figures. Three bases are common:
- Base salary: the employee’s stated annual salary before superannuation or other additions.
- Total fixed remuneration (TFR): base salary plus compulsory superannuation and any fixed allowances.
- First-year total remuneration: TFR plus likely bonuses or commission expected in the candidate’s first year.
Here’s how a 20% fee plays out on a role with a $100,000 base salary and superannuation:
- On base salary ($100,000): the fee is $20,000.
- On total fixed remuneration, the fee depends on the applicable superannuation and any fixed allowances.
- On first-year total remuneration, the fee also depends on any bonus or commission included in the calculation.
The difference between the cheapest and most expensive interpretation depends on which remuneration components are included.
A lower headline percentage can still cost more in dollars if it’s calculated against a larger remuneration base, which is why the fee basis matters more than the percentage alone.
Pro Tip: Ask every agency to put the fee basis in writing before you sign, and confirm explicitly whether superannuation or bonuses are included in the calculation.
Payment timing, replacement guarantees and contract clauses to check
Payment terms vary by agency, so it pays to know what’s standard before you sign anything.
- Invoice timing: some agencies invoice on candidate acceptance, others on the start date, and some split the fee across both with a final portion after a probation period.
- Replacement guarantees: terms and durations vary by agency, with conditions that may exclude redundancy or restructuring and may require the role and salary to remain unchanged.
- Introduction windows: many contracts include a clause charging a fee if you hire a candidate the agency introduced within a set period, often six to 12 months, even without further agency involvement.
- Direct applicants: keep dated records of candidates who apply to you directly, since this is the most common evidence needed to dispute a fee claim on someone you sourced yourself.
Our guide on placement fee payment terms breaks down the structures employers most commonly encounter.
What drives variability in placement fees and how employers can influence cost
Several factors push fees up or down, and understanding them gives employers some control over the final cost.
- Role seniority and specialist skills: executive, technical and niche roles command higher fees because fewer candidates qualify.
- Candidate scarcity: tight labour markets for a given skill set push rates toward the higher end of the typical range.
- Exclusivity and speed: agreeing to an exclusive search or a tight turnaround generally increases cost, while an open search run by multiple agencies tends to be cheaper per engagement.
- Screening depth: requesting reference checks, psychometric testing or criminal history checks adds effort and typically adds to the fee.
- Geographic reach: a role requiring a national or remote search can cost more than a local hire, simply because sourcing effort expands.
Employers who want to manage cost have real levers here: choosing a non-exclusive search, accepting a realistic timeline, and being selective about which checks are genuinely necessary for the role.
Fixed fees versus percentage-based fees: what the numbers show
The clearest way to see the difference between pricing models is to run the same hire through both.
Take a $110,000 salary role. Under a flat-fee model priced at a fixed $4,795 regardless of salary, the same hire costs less than a quarter of the percentage-based fee. The gap widens further as the salary climbs, since a percentage fee scales with pay while a flat fee does not.
This is the core value proposition of fixed-fee recruitment: cost predictability that doesn’t move with the salary you’re offering. A business hiring an administrator and an engineering manager pays the same flat rate for both under a fixed-fee structure, while a percentage model charges more for the higher-salaried role.
For employers hiring multiple roles across a year, that consistency makes budgeting considerably easier. A percentage-based agency fee is a moving target until the candidate’s salary is finalised, whereas a flat fee is known from the moment the engagement begins, which matters most to businesses running tight annual hiring budgets rather than one-off executive searches.
Hidden costs beyond the headline placement fee
The quoted percentage or flat fee is rarely the only cost on the invoice. Several additional charges commonly appear once the engagement is underway.
Background screening is a frequent add-on: criminal history checks and psychometric evaluations are often priced separately rather than bundled into the base fee. Advertising costs for job board listings can also sit outside the headline fee, particularly with agencies that don’t include this in their pricing. GST applies to recruitment fees as it does to most professional services in Australia, and some contracts add administrative or onboarding charges that aren’t obvious from the initial quote.
The introduction clause covered earlier is another cost many employers don’t anticipate: hiring a candidate the agency introduced within the contract’s window can trigger a fee even if the agency did no further work. Reading the full fee schedule, not just the headline number, is the only way to avoid a surprise invoice.
How fixed-fee recruitment works from engagement to placement
A fixed-fee engagement typically follows a structured sequence rather than an open-ended search. It starts with an upfront engagement fee that confirms the brief and locks in the agency’s resourcing, followed by candidate sourcing against the agreed role criteria.
Screening usually covers a review of applications against the role’s core requirements, followed by phone or video interviews to shortlist candidates worth presenting. The agency then coordinates interviews between the shortlist and the hiring manager, managing scheduling and feedback loops so the employer isn’t chasing availability. Once a candidate is selected and accepts an offer, the placement fee is invoiced, often with optional add-ons such as criminal checks or psychometric evaluation available at that stage.
The structure mirrors a traditional agency process in sequence, sourcing, screening, interviews, placement, but the cost at each stage is known from day one rather than depending on the final negotiated salary.
Choosing a recruitment agency: what to check against your needs
Fee structure should never be the only factor, but it’s the one most employers under-scrutinise. A few questions help separate a good fit from a costly mismatch.
Check whether the agency’s pricing model suits your hiring pattern: a business making several hires a year across varied salary bands generally benefits more from flat-fee pricing, while a single senior executive search might justify a retained percentage arrangement. Ask what the fee basis is and get it in writing, since this single detail can change the dollar cost more than the headline percentage.
Confirm what the fee actually includes: sourcing, screening, interview coordination, and whether checks like psychometric testing or criminal history screening are bundled or billed separately. Look at replacement terms closely, since a 30-day guarantee and a 90-day guarantee represent materially different levels of protection for the same headline fee. Finally, weigh the agency’s reach against your role: a specialist or senior search may need wider sourcing than a standard administrative hire, and pricing should reflect that difference rather than apply a blanket rate to every role.
Our guide on how recruitment agencies work for employers covers the practical side of managing an agency relationship once you’ve chosen one.
Why predictable fees matter more than employers realise
Most hiring budgets are built around salary bands, not a floating percentage that changes with every candidate’s pay packet. That mismatch is the real cost of percentage-based recruitment: a finance manager hire that comes in $15,000 above the expected salary doesn’t just change the offer, it quietly inflates the agency bill too.
A fixed fee removes that variable entirely. It won’t suit every search, a highly specialised executive role may still justify a retained arrangement, but for the bulk of permanent hiring that small and midsize businesses do each year, knowing the exact cost before the search even starts is worth more than a theoretically lower percentage that moves depending on who gets the job.
— Josh Townsend
A fixed-fee alternative worth comparing before you sign
Once you’ve seen how far a percentage fee can swing depending on salary and remuneration basis, a transparent fixed-price model becomes easier to justify. We charge a flat fee, which means the cost you’re quoted at the start of the engagement is the cost you pay.
Here’s what that looks like in practice:
- Engagement begins with a fixed fee that covers sourcing, screening and interview coordination, with no hidden percentage tied to the eventual salary.
- A replacement campaign is available if a placement doesn’t work out, giving you cover without starting the budget conversation from scratch.
- Optional extras like criminal checks and psychometric evaluation are priced separately and listed clearly, so there’s nothing buried in the fine print.
If you’re currently comparing a percentage-based quote against a flat-fee option, our simple flat-fee structure page lays out exact pricing by role tier. It’s worth running your own numbers against it before committing to a percentage-based agreement.
FAQ
What is the typical fee for a recruitment placement?
Most agencies charge between 15% and 25% of the placed candidate’s annual salary, with averages often sitting around 15% to 20% depending on the role’s seniority and how scarce the required skills are. Fixed-fee alternatives also exist and charge a flat dollar amount instead of a percentage.
What are red flags for recruiters?
Watch for vague fee bases that aren’t specified in writing, since an agency unwilling to confirm whether the percentage applies to base salary or total remuneration is harder to budget against. Unusually long introduction windows, unclear replacement guarantee conditions, and reluctance to put payment timing in the contract are also worth questioning before you sign.
How do placement fees work?
A placement fee is charged once a candidate sourced by the agency accepts and starts in the role, calculated either as a percentage of salary or as a pre-agreed flat fee. Payment is typically invoiced on acceptance, on the start date, or split across both, with terms varying by agency.
Does it cost money to use a recruitment agency?
Yes, but the cost is paid by the hiring employer, not the candidate. It’s illegal in Australia and New Zealand to charge job seekers a fee for placement, so any recruitment cost sits entirely with the business doing the hiring.
Sources
- Recruitment Agency Costs Australia 2026: Fees, Margins & …
- Recruitment Agency Fees in Australia: Pricing, Margins and When to Walk Away — Kolvera Blog
