If you MUST discount your recruiting fee…

By Veronica Scrimshaw

Independent recruiters face continued downward fee pressure from clients. Many give in to these demands for discounted recruiting fees. I think it’s a slippery slope and ultimately not a good way to elevate the recruiting profession. How many other professional service providers routinely slash their fees? Accountants? Attorneys?

Years ago, when I was going after my first summer babysitting job, my dad told me to establish my fee at 50 cents per hour MORE than the going rate (yes, I’m dating myself, but that was a *huge* difference). I thought he was nuts. There were PLENTY of other babysitters offering lower rates, and I really wanted that job. I knew they’d say yes at the lower price. I was sure they’d never agree to the higher one. “But you’re worth that extra money and here’s why,” my dad said – and helped me to make a list of my differentiators. Turns out he was right. I got the job, and I babysat for them regularly until one newborn infant turned into two school-age kids. They even referred me for other babysitting jobs. (Thanks, Dad!)

It’s not any different when clients ask for discounted recruiting fees. Some independent recruiters establish their fees based on “the going rate” without giving it much more thought. Some don’t think about their differentiators. Some don’t have differentiators. And that’s how the door gets opened for clients to ask for discounts. Greg Savage says recruiters should be having conversations about value, not price. Jeff Kaye says that if you can’t differentiate based on approach, you’ll be forced to differentiate on price. I agree with both of them. Do you really want to be known as the cheapest recruiter?

As an independent recruiter, you’ll face this dilemma more times than you care to admit during your recruiting career. You’ll have to decide when, if ever, to discount your recruiting fee. Last week I saw a Tweet by Jeremy Snell from Zero Entropy Networks that said recruiters should negotiate fee discounts in dollar amounts, not percentages. I absolutely agree with him. It’s far too easy to offer a 10% discount, which seems like a small number until you actually calculate the math. Why not offer a discount of $1,000 instead? The client will still reap a sizeable financial savings, but you won’t have given away such a big chunk of your well-deserved paycheck. Better yet, ask the client to give you something in exchange for the discount – for example, payment within 10 business days. After all, it’s a negotiation, right? Tying the discounted recruiting fee to an action on the client’s part doesn’t devalue your service.

Understand the value of the service you provide, and be able to articulate it to your clients. Then protect it fiercely. Don’t sell yourself short because “everyone else is doing it.” My babysitting customers were happy to pay a premium for my services because they knew they were getting excellent value. Don’t you want the same kind of relationship with your clients?

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3 Comments

  1. Drue De Angelis, 31-July-2012:

    I always encourage recruiters NEVER to discount their fees, especially with a new client. If they don’t see your value, then they won’t defer to your expertise later on. It is a critical litmus test to ensure a well run process where your input is respected.

  2. Jeremy Snell, 1-August-2012:

    Such truth in what you write here. If a recruiter doesn’t value their fee and what makes them different how will they ever get a client to believe it? My beliefs influence how I project that value..
    Additionally, negotiating in $ is so much better than % – Most people would fail to recognise 10% if they saw it on the floor but the same person is likely to swoop on $500 if they saw it on the floor! A discount of $647 sounds much more calculated than a drop of 15% too. The poit you make about trading is also very valid. If I agree to a discounted fee I believe I should receive something in return – The bigger my discount the larger my request should be.
    Recruiters need to stop giving away money and start to get something back in return. Some of you may be able to look back on the last few assignements and recognise where you could have got more back in return:

    $532 discount? – Happy to agree if we schedule 3 interviews for monday right now.

    $897 discount? – Give me a small deposit (retainer) 3 interviews confirmed in the diary for next week and decision by August 15th and we have a deal…

    Good post Veronica and I hope some recruiters take note.

  3. Veronica Scrimshaw, 1-August-2012:

    @Drue … great line! “If they don’t see your value, then they won’t defer to your expertise..” Spot on!

    @Jeremy … thanks for commenting, and for sparking the idea for this post! :-)

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