The raise lands, the hiring plan triples, and someone on the founding team is suddenly screening resumes between customer calls. The first instinct is to call a recruiting agency. It's familiar, and nothing is owed until someone accepts an offer.
Then the first fee agreement arrives, and the real question shows up: how much do recruiters charge, and what exactly are you paying for?
Most founders weigh three ways to pay for outside recruiting (contingency, retained search and a flat monthly retainer) alongside hiring a recruiter in-house. This article covers what each one typically costs, what the fee actually buys, and how to pick the model that fits your stage.
How much do recruiters charge? The short answer
Typical fees by model, based on industry benchmarks:
• Contingency recruiters: 15 to 25% of the hire's first-year salary, paid only when an offer is accepted.
• Retained search firms: commonly around a third of first-year compensation, paid in installments, mostly for executive roles.
• Fractional recruiters: at InTandem, we charge a flat monthly retainer that rises or falls with the number of open roles, instead of a fee per hire. (Other fractional recruitment firms might have a different model)
• In-house recruiters: a salary, plus benefits, tools and ramp time.
The percentage tells you what a hire costs. The structure tells you what the recruiter is rewarded for, and that's the part most founders skip.
Contingency recruiting fees
Contingency is the model most people picture when they hear "recruiter." The agency sources and submits candidates, and you pay nothing unless you hire one of them. When you do, the fee is a percentage of the hire's first-year salary, usually 15 to 25%. Senior, specialized and hard-to-fill roles sit at the top of that range. Some agreements calculate the fee on total first-year cash compensation, bonus included, rather than base salary alone, so read that line in the contract.
Most contingency agreements also include a guarantee period. If the hire leaves or is let go within the first few months, the agency replaces them or refunds part of the fee.
The fee usually covers sourcing, screening and submitting candidates. Intake, interview loops, offers and candidate experience stay with you. Plenty of teams keep their own job ads running at the same time, which leaves two pipelines to manage.
Contingency has genuine strengths: you can test it on one search without a long contract, and a specialist agency often knows candidates in its niche that nobody else does. The tradeoff is structural, not personal. The fee pays on an accepted offer, so the model rewards speed and volume. That says nothing about any recruiter's effort or intent. It's simply what the model pays for. (We wrote more about how that plays out in why traditional recruiting struggles at scaling companies.)
Retained search fees
Retained search is the executive search model. The fee is commonly around a third of the role's first-year compensation, usually paid in installments: one at kickoff, one when a shortlist is presented, and the last when the hire is made. The search is exclusive, and the firm is paid for running it, not only for the outcome.
That structure buys a dedicated, methodical search, often confidential, with deep market mapping. It makes sense for C-suite and board-level roles where a quiet, thorough process matters more than speed. For a startup hiring its next few engineers and an account executive, it's usually more search than the roles need.
The flat monthly retainer: how fractional recruiting is priced
Fractional recruiting is the newer model, and it's the one we built InTandem around. Instead of a fee per hire, you pay a flat monthly retainer tied to how many roles you're working on. You may also see it called recruitment as a service, or RaaS.
Here's how pricing works on our side. A fractional retainer is set by two things: how many roles you have open, and how much of the process you want covered (talent strategy and process, hands-on recruiting, or both). When roles close, the retainer steps down. When a new sprint starts, it steps back up.
We tried billing by the hour early on and dropped it. An hour spent mapping a niche engineering market and an hour on a role a client's own network can fill aren't worth the same thing. Pricing on open roles tracks what a client actually needs from us.
The retainer covers the work most founders don't realize a hire needs: intake and role definition, sourcing, interview design, scorecards, candidate experience and offers. Our recruiters work from your tools and reach out under your company's name, so candidates experience us as part of your team.
The tradeoff: you pay in slow months too. A retainer pays off when you have a steady run of roles and a hiring team that responds quickly. If you're hiring at high, steady volume all year, an in-house team is usually the better value, and we'd rather say that up front than sell you a retainer you'll outgrow.
For a closer look at the role itself, see What Is a Fractional Recruiter?
What about hiring an in-house recruiter?
An in-house recruiter costs a salary plus benefits, tools such as an ATS and sourcing licences, and a few months of ramp time. That cost is the same in a month with eight open roles as in a month with none.
You get full alignment: an in-house recruiter's goals are your goals. What you give up is flexibility. It's rare to find one person who can design your hiring process and run eight searches at once, and if hiring slows after a busy quarter, you're carrying a full salary for a quiet desk. That's why recruiting roles tend to disappear early when budgets tighten.
Recruiter fees compared
Each model is built to reward something different.
| Contingency | Retained search | Fractional recruiting | In-house recruiter | |
|---|---|---|---|---|
| How you pay | 15 to 25% of first-year salary, per hire | About a third of first-year compensation, in installments | Flat monthly retainer, adjusted to role volume | Salary, benefits and tools |
| Rewarded for | Accepted offers | Running a thorough search | Hires that last | Your goals, at one person's capacity |
| Scope | Sourcing and submitting candidates | Full executive search | Strategy, process, hands-on recruiting, or all of it | Everything, permanently |
| Flexibility | Easy to start and stop, full fee on every hire | One search at a time | Scales up, down or pauses | Hard to flex |
| Commitment | Low | Exclusive, partly paid upfront | Monthly | Long-term |
The costs that don't show up on the invoice
Fee comparisons only tell half the story. The bigger number is usually what a hire costs when it goes wrong.
Gallup estimates that replacing an employee costs one-half to two times their annual salary. For a startup, a senior mis-hire also costs time. Count it out: a full search to make the hire, a few months before it's clear it isn't working, a careful exit, then the search again. Most of a year can pass before that seat does what you needed.
Then there's founder time: evenings spent reading resumes and nudging interviewers for feedback are evenings not spent on the product or the next raise. Candidates also read a role that's been reposted three times as a warning sign.
None of this appears on a fee agreement, but it should shape how you compare them. We break it down further in the real cost of a bad hire.
Which recruiter fee model fits your stage?
A quick way to decide:
A single hire you can describe in one sentence, and an interview process that already works: contingency is a reasonable choice.
A confidential executive search where thoroughness beats speed: retained search.
Dozens of hires a year, every year: build an in-house team.
Bursts of hiring after a raise, where each hire shapes the company and a permanent recruiting hire would sit idle once the sprint ends: fractional recruiting.
Most of the founders we work with are in that last group, which is why InTandem exists. We've had engagements end ahead of schedule because roles filled faster than planned, and we count that as a win. We earn the same whether a role takes three weeks or three months, so a fast close simply means the retainer steps down sooner. Here's how our fractional recruiting works.
Recruiter Fees FAQ
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Often, yes. Contingency percentages can move with the number of roles, seniority, exclusivity and the length of the guarantee period. Ask what's included, not just what it costs.
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In the standard model, no. The employer pays. In Ontario, recruiters must also hold a provincial licence, and employers can't knowingly use an unlicensed one (Government of Ontario). It's a fair question to ask any recruiting partner.
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Under contingency, no. Under retained search, you've usually paid the early installments regardless of outcome. Under a flat monthly retainer, you pay for the months the engagement runs, so ask how notice works and what happens if the first month doesn't go well.
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A window, commonly a few months, during which a contingency or retained recruiter will replace a hire who leaves or is let go, or refund part of the fee. Check how long it lasts and whether it's a replacement or a refund.
Planning a hiring sprint?
Send us your list of open roles and we'll tell you plainly which model fits, even when it isn't ours. Get in touch.
