How to Negotiate a Discount with a Recruitment Agency

If you read my blog "Why Are Recruitment Agencies So Expensive?" this blog is almost certainly redundant.

But you're here now and I don't like wasting people's time so I'll give you some tips to successfully negotiate a fee down.

Firstly, read the above blog

I mean it.

The reason most people want to reduce a fee is because they have little to no understanding of what a recruitment agency does. That recruitment consultants play 'snap' with a database they magically created for free.

I believe that in order to have a successful negotiation you need to know the facts, in this case, what service you're going to be offered.

It's for you to decide which bits of that service you're willing to give up in order to obtain a discounted price.

These are your options.

Just go straight in and say that you have another agency interested in working with you at a lower cost

And that you expect this agency to do the same.

Sometimes this works.

Consultants who don't believe in their offering, don't know how to defend what they do, or are under immense pressure to bring cash in (whatever the consequences) might just break and match the quote from elsewhere, even prepared to undercut.

They still need to make a profit so they'll likely have to cut corners or prioritise better paid work, meaning you may not get the results you wanted.

Why place a great candidate in a job and earn 10% when someone else values what you do and will pay 20%?

And if they don't fill the job you won't have to pay, so that's fine. I mean, you'll be eight weeks down the line with no sign of a filled vacancy, but never mind, eh?

Negotiate a discount for multiple vacancies

If you've got a lot of work, the agency may be willing to take on several vacancies and offer a discount based on volume.

This becomes less attractive with promises of work down the line since agencies have heard these sorts of promises before and those other vacancies that were promised often never materialise.

Ask for a fixed fee

This is not always the cheapest method but smaller businesses in particular like to be able to have a fixed budget where agencies typically charge a fee that is a percentage of the annual salary (plus car/bonus).

If your motivation for opening up a negotiation is that you need to know precisely what the recruitment cost will be, request a quote for a fixed sum.

Working across a broad salary scale, if you end up offering a low starting salary, the fee might seem a little higher than based on a percentage but often it's lower. Either way, you achieve the outcome you wanted of being able to budget precisely and the agency will benefit in the same way.

Ask the agency if there is an opportunity to lower the fee by reducing the service offered

We have a client who does this by eliminating the rebate period. Instead, he takes 100% of the responsibility for an unsuccessful hire.

A rebate period to an agency is a frustrating 'guarantee' or insurance that if something goes wrong in the first few weeks, the client can have a replacement for free or some money back.

If your recruitment process is as robust as you assured the agency it is, you shouldn't need the rebate.

Eliminating this risk enables the agency to rely upon the revenue once an invoice has been raised, removing uncertainty for several weeks and aiding cash flow.

Maybe you could cope if the agency took a brief, wrote an advert and posted it for you, pushing any applications directly to you to manage? Thus reducing their workload and allowing them to pass on a discount.

Choose the agency you want to work with and speak with them and them alone, offering exclusivity

Agencies just want to do a great piece of work and be paid for it.

Who on earth created this weird industry where you can do six months of work, compete with other people, and not get paid? It's absolutely insane.

Offering to work exclusively, therefore ensuring the agency can do a thorough, quality piece of work and know they'll get paid will mean they are far more likely to consider a reduction in the fee.

Depending on the discount agreed, you might be tied in with an upfront non-refundable fee. Or it might be refundable if the agency can't supply a short-list.

The smaller the risk of not getting paid, the more likely a consultant will bend.

Retained recruitment

The creme de la creme and now the sole method for many recruitment agencies because it's the fairest way to do business.

And often the most successful for everyone concerned.

Typically this looks like you paying a third of the fee on instruction, a third at the shortlist or interview stage and then a third on offer.

Each invoice stage is non-refundable. You're engaging an agency to drop other work to prioritise you and get paid at each stage of the process like you'd expect for any project.

The agency will be able to do a thorough and quality piece of work knowing they're being paid, and with you paying as each stage is completed, the recruiter will be content and remain focused on getting results.

Would you like to learn more about opening up your talent pool?

How to Attract More Over 50 Job Applicants

How to Attract More Female Job Applicants

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Reducing the Chances of a Bad Hiring Decision

Clare Wight is the founder and Managing Director of Clarity Appointments, an independent recruitment specialist. She served as a Regional Director for The Employment Agents Movement, supporting other independent recruiters.

She remains an active member of Recconnect (formerly Members Only), a recruitment leadership network promoting high ethical standards, collaboration, diversity, equity and inclusion.

She believes business owners are more fulfilled and higher-performing when they provide emotional and professional business support to other business owners, even those they deem to be competitors. She does this actively, whilst challenging and updating her skills and knowledge of the recruitment sector, enabling her to offer the best advice to firms looking to make their next hire.