How to Price Your Recruitment Services in Australia: Fees, Margins, and When to Walk Away

Pricing is the decision that most directly determines whether a recruitment agency is profitable or struggling. Set fees too high and you lose clients to competitors. Set them too low and every placement erodes your margin. Most agency owners started as recruiters, not business strategists, and many are still using the fee structure they inherited from their first employer without questioning whether it fits their market.

This guide covers how to price recruitment services in Australia in 2026, with benchmarks for permanent, contract, and temporary placements.

Contingency Fees: The Australian Standard

Contingency recruitment fees in Australia typically range from 15 to 22% of the candidate's first-year base salary, with the national average sitting at 17 to 18% according to the 2025 RCSA Fee Survey. The fee is only payable if a placement is made, meaning the agency bears all sourcing and screening costs upfront with no guarantee of revenue. Contingency fees have been under downward pressure for a decade, with the average declining from 20% in 2015 to 17.5% in 2025, driven by PSA (preferred supplier agreements) and procurement-led negotiations.

The contingency model dominates Australian recruitment, accounting for approximately 75% of all agency placements. Standard fee ranges by sector:

• General office and administration: 12 to 15%. High volume, lower margin, competitive market
• Professional services (accounting, legal, marketing): 15 to 18%. Standard market rates, moderate competition
• IT and technology: 17 to 22%. Candidate scarcity drives fees higher, especially for niche skills
• Engineering and construction: 15 to 20%. Varies significantly by role seniority and location
• Executive and senior management: 20 to 30%. Often retained or partially retained
• Healthcare and trades: 12 to 16%. Volume-driven with tight margins

The fee percentage should reflect three factors: the difficulty of the search (niche roles warrant higher fees), the speed required (urgent fills justify a premium), and the value of the placement to the client (a A$200,000 CFO placement at 20% generates A$40,000; a A$65,000 administrator at 15% generates A$9,750).

Retained Search: When and How to Charge

Retained search involves an upfront commitment from the client, typically structured as one-third of the estimated fee paid at engagement, one-third at shortlist presentation, and one-third on placement. The total fee for retained searches in Australia ranges from 25 to 33% of annual salary. According to AESC (Association of Executive Search and Leadership Consultants) 2025 data, retained search accounts for approximately 12% of the Australian recruitment market by revenue but generates disproportionately higher margins because the upfront payments cover sourcing costs regardless of outcome.

Retained search is appropriate when:

• The role is senior: Generally A$180,000 or more in base salary. Below this, clients are reluctant to pay upfront
• The role is confidential: Replacing a current incumbent, board-level appointments, or competitive intelligence concerns
• The market is extremely tight: Niche roles where the talent pool is under 50 people nationally
• The client values exclusivity: Retained search means you are the only agency working the role. Contingency means 3 to 5 agencies competing

The three-stage payment structure:

1. Engagement fee (33%): Paid on signing. Non-refundable. Covers the cost of market mapping and initial outreach. For a A$250,000 salary at 30%, this is A$25,000
2. Shortlist fee (33%): Paid when a qualified shortlist of 3 to 5 candidates is presented. Demonstrates deliverables before the final third
3. Placement fee (33%): Paid on candidate acceptance. Some firms offer a reduced final payment if the search takes longer than the agreed timeframe

Retained search requires a different skill set from contingency recruitment. You are selling a consulting engagement, not a transactional service. The proposal must demonstrate market knowledge, research methodology, and a clear timeline.

Temporary and Contract Margins

Temporary and contract recruitment generates revenue through margin (the difference between the charge rate to the client and the pay rate to the worker). In Australia, standard temp margins range from 18 to 30% of the charge rate, with the national average at approximately 22% according to the 2025 Staffing Industry Analysts report. For example, if a contractor is charged out at A$85 per hour and paid A$66 per hour, the margin is A$19 per hour (22.4%). Margins above 25% are achievable for specialist contractors but increasingly difficult for general admin and light industrial placements where rate transparency is high.

The margin calculation:

• Charge rate: What the client pays per hour, day, or week
• Pay rate: What the contractor receives (including super, leave loading where applicable)
• Margin: Charge rate minus pay rate, expressed as a percentage of the charge rate
• On-costs: Superannuation (11.5% in 2026), WorkCover (varies by state and industry, typically 1 to 5%), payroll tax (threshold varies by state, generally 4.85 to 5.45% above threshold)

Critical margin considerations for Australian agencies:

• Superannuation is not optional: The SG rate is 11.5% in 2026. It must be factored into your cost base, not taken from your margin
• Payroll tax thresholds: NSW threshold is A$1.2 million, Victoria A$900,000, Queensland A$1.3 million. Once you exceed the threshold, every additional dollar of contractor wages incurs payroll tax
• WorkCover premiums: Vary dramatically by industry. Construction and trades can be 3 to 5%, while office-based work is under 1%
• Leave loading on casuals: The casual loading (currently 25%) is designed to compensate for the absence of leave entitlements. Ensure your charge rate accounts for this

Fee Negotiation: When to Hold and When to Flex

Fee negotiation is inevitable in Australian recruitment, with 80% of clients attempting to negotiate below the agency's standard rate. The most effective negotiation strategies are anchoring high (opening at your ideal rate, not your minimum), offering volume discounts instead of rate discounts (lower fee per placement in exchange for guaranteed volume), and walking away from clients whose fee expectations fall below your minimum profitable rate. A 2024 Hays survey found that agencies with documented fee policies achieve average fees 2.3 percentage points higher than those that negotiate ad hoc.

Rules for fee negotiation:

• Know your floor: Calculate the minimum fee at which a placement is profitable after consultant time, tools, and overhead. For most agencies this is 12 to 14% for perm, 16 to 18% margin for temp
• Anchor high: If your target is 18%, quote 20 to 22%. The client will negotiate down, landing at your target
• Trade, do not discount: If a client wants a lower fee, ask for exclusivity, a retainer component, or a commitment to multiple roles. Never reduce fees without getting something in return
• Document everything: Fee agreements in writing before any work begins. Verbal agreements are the leading cause of fee disputes in Australian recruitment
• Volume tiers: 1 to 3 placements at 18%, 4 to 8 at 16%, 9 or more at 15%. This rewards loyalty without giving away margin on single placements

When to Walk Away

Walking away from low-fee clients is the most profitable decision many agencies never make. Placement fees below 12% for permanent roles generate negative margin for most Australian agencies after accounting for consultant time, tool costs, and overhead. According to the 2025 RCSA Industry Report, agencies that enforce minimum fee thresholds achieve 31% higher revenue per consultant than those that accept any fee level. Walking away from one low-fee client frees consultant capacity to pursue three higher-fee opportunities.

Walk away from a client when:

• The fee is below your floor: No placement at 10% is worth the consultant time. The 40 hours spent sourcing and screening could have been used on a 20% placement worth four times as much
• The client has a history of fee disputes: If they negotiated hard at engagement, they will dispute the invoice at placement. Document everything and consider requiring payment terms in the engagement letter
• The brief is unrealistic: A$80,000 salary for a role that requires A$120,000 of experience is a time sink, not an opportunity
• The client uses 5 or more agencies per role: Your probability of placement drops below 20%. Unless the fee is exceptionally high, the expected value is negative
• Payment terms exceed 60 days: Cash flow kills more agencies than lack of revenue. Negotiate 14 to 30 day terms or walk

Frequently Asked Questions

What is the average recruitment fee in Australia?

The average contingency placement fee in Australia is 17 to 18% of the candidate's first-year base salary, according to the 2025 RCSA Fee Survey. This average masks significant sector variation: general admin roles attract 12 to 15%, while technology and executive placements command 20 to 30%. Retained search fees are typically higher at 25 to 33% of salary, justified by the upfront commitment and exclusive engagement model.

How do I calculate temp margins correctly?

Temp margin is the difference between the charge rate (what the client pays) and the total cost of employing the worker (pay rate plus super at 11.5%, WorkCover, payroll tax if above threshold, leave loading for casuals, and any other on-costs). A healthy margin is 20 to 25% of the charge rate after all on-costs are deducted. Many agencies underestimate on-costs by 3 to 5 percentage points, which erodes their actual margin below breakeven for lower-rate placements.

Should I offer discounts to win new clients?

Offering upfront fee discounts to win new clients is generally a poor strategy because it sets a price anchor that is extremely difficult to raise later. Better alternatives include offering a volume discount structure (standard rates for 1 to 3 placements, reduced rates for 4 or more), a free replacement guarantee period (30 to 90 days), or a first-placement rebate (10% of the fee returned as credit toward the next placement). These approaches demonstrate value without permanently reducing your rate card.