Agency fees vs flat fees: the real cost of a $75k hire
On a $75,000 role, a traditional recruitment agency will invoice you $11,000 or more. Here is what the market actually charges, what the guarantees really cover, and when each option makes sense.
When one of our clients needed an office manager in regional Queensland, a recruitment agency benchmarked the role at $75,000 plus superannuation and quoted their standard fee. Nothing unusual about that. What surprised the client was the arithmetic: at the typical 15 to 25 per cent of salary, that single placement would cost somewhere between $11,250 and $16,500.
We went and checked the whole market properly. Here is what hiring that $75k role actually costs in Australia, option by option.
The traditional agency: $11,000 to $16,500
Contingency recruiters charge a percentage of the first-year salary, most commonly 15 to 20 per cent, and the invoice lands in full when the candidate starts. For that you get their candidate network, the screening legwork and speed. For many senior or hard-to-fill roles that can be money well spent. For a receptionist, an administrator or a coordinator, it is a lot of margin on a straightforward search.
The flat-fee players: $3,750 to $6,000
A newer tier of flat-fee recruiters has pushed prices down. In our market check, one charged 5 per cent of base salary, about $3,750 on this role, with a 12 month guarantee. Another ran a $6,000 minimum fee on seven day payment terms. The trade-off is usually volume: flatter fees mean more automated sourcing and less hand-holding, and you do more of the interviewing yourself.
The guarantee small print nobody reads
Most agencies offer a replacement guarantee of around three months, and here is the detail that matters: it usually only applies if the candidate resigns. If they stay but they are simply not right for the job, that is your problem, not the agency’s. Longer guarantees exist, and guarantees that cover “not the right fit” are rare enough to be a genuine differentiator. Always ask what triggers the guarantee, not just how long it runs.
Doing it yourself: cheap until you count your hours
A job ad costs a few hundred dollars to around $2,000 depending on placement and add-ons. The real cost is time: our market research put the internal effort to get from posting to a decent shortlist at 17 to 27 working hours. That is most of a week of someone’s time, usually the owner’s, spent reading duplicate CVs. If your time bills at anything, the “free” option is not free.
Where we landed
We built ACTIv8’s recruitment offer directly off this research: $1,500 flat per role, end to end, covering sourcing, screening interviews, a shortlist, reference and background checks. Half is invoiced when we start, half at the three month mark, and the guarantee runs six months and covers “not the right fit”, not just resignation. On the $75,000 role above, that is roughly a tenth of the traditional agency fee for the same outcome.
None of this means agencies are villains. It means the market has a wide price range for the same job, and it pays to know where on that range your role actually needs to sit before you sign anything.
Hiring soon and want a straight answer on what it should cost? Talk to ACTIv8. Twenty minutes, no hard sell, and we will tell you if the cheap option is the right one.