Your pricing model is not an administrative choice. It decides which assignments you take on, how long you keep working a role, when the money arrives and what your client optimizes for. Below are six models side by side: the mechanism, who carries the risk, what incentive it gives both sides and where it falls apart. Then working capital, guarantee terms, the same placement priced three ways, and how to move an existing client without losing them.

Six models and the incentives they give

1. Fixed fee per placement

You agree an amount per hire upfront, regardless of salary. The fill risk sits with you. Your incentive is speed, because every extra week of searching lowers your return per hour, and you have no stake at all in a higher salary. The client's incentive is to push ever heavier profiles under the same fee. So work with two or three fee bands per role group and agree which band a profile falls into before you start searching.

2. Percentage of annual salary

Your fee is a percentage of gross annual salary, and that changes the incentive fundamentally: you earn more the higher the salary lands. Your client knows it, so every salary negotiation breeds suspicion. Defuse it by letting the client run the salary conversation themselves, or by freezing the fee at the midpoint of the range you agree at the start. Nail down the basis too: does holiday allowance count, a thirteenth month, a bonus, a company car?

3. Hourly margin on temp and contract staffing

You invoice a client rate per hour worked and keep the difference against your cost price. You are not rewarded for the placement but for every hour someone stays, so your incentive is retention. The client has the opposite incentive: hire the person directly or push the rate down once they are up to speed. Agree a declining conversion fee and an indexation clause for collective agreement increases upfront. This model breaks on idle time, absence without cover and clients who are slow to sign off hours.

4. No cure no pay

You only get paid on a hire, usually while two or three other agencies hold the same assignment. All of the risk sits with you, and that steers your behavior: you prioritize the roles that are easiest to fill and the clients who decide quickly. The client pays nothing upfront and therefore commits to nothing, which produces exactly the assignments you do not want. You make this workable not with a lower price but with a stricter entry: exclusivity for a defined period, an agreed feedback window on CVs, and an intake where you ask who signs and when.

Leadstars itself works entirely no cure no pay in its own services, so this is not a criticism of the model. It is exactly why qualifying upfront is half the work.

5. Retained or partly upfront

You split the fee into installments: on assignment, on shortlist and on hire. The client now carries part of the risk and behaves accordingly, so calendars open up and feedback arrives within days. The problem is getting started, because this model asks for proof you do not yet have with a new client. So sell it as a process: a market map, a longlist with a note on every company approached, a shortlist. The way in is the scarce profile the client has been advertising for months with nothing to show for it.

6. Subscription or capacity retainer

A fixed monthly amount for an agreed volume of recruiter capacity or an agreed number of vacancies. Your revenue becomes predictable and you are rewarded for building process rather than individual placements. Watch the incentive this hands you: if the client supplies no vacancies, standing still is profit for you. So report monthly on delivered output, and include a clause for over and under usage: what happens at seven vacancies instead of three, and what happens at zero.

Working capital: which model finances whom

The difference is not only margin, it is who finances the gap between costs and income. With hourly margin, that is you: you pay wages, social charges and reserves weekly or every four weeks, while the client pays on thirty to sixty days.

Assume: 20 temporary workers, 36 hours a week, a cost price of 26 euro an hour. That is a little over 18,700 euro of wage costs per week. With a 45 day payment term plus a week of processing you are financing roughly seven weeks ahead, so around 130,000 euro permanently tied up. Note: these are assumptions to show the arithmetic, not industry figures.

With fee models you only finance your own operation: recruiter hours and ad budget during the time to fill. With no cure no pay you finance those hours for every assignment that yields nothing as well. Anyone who wants to grow fast in contract staffing needs a credit line or factoring, anyone working on fees mostly needs a full pipeline.

Guarantees and clawbacks

A guarantee period is not a detail, it is a second pricing agreement. Nail down three things before you sign.

  1. The duration, and whether it starts on the first working day or on the contract date.
  2. The form: replacement, pro rata refund or a credit note. Replacement protects your cash flow, a refund protects the client's.
  3. The exclusions: departure due to restructuring, a change in the job content, or a client who does not pay the salary on time.

A pro rata scale is the easiest to explain. Say: one hundred percent back if they leave within thirty days, fifty percent between thirty and sixty days, nothing after that. Combine that with no cure no pay and your risk stacks up, because you already worked for free. In that case ask for payment within fourteen days of the first working day, not after the probation period.

The same placement, priced three ways

Assume: a work planner on a gross annual salary of 48,000 euro plus 8 percent holiday allowance, so a basis of 51,840 euro. You spend 25 recruiter hours on it. Note: these are assumptions to show the arithmetic, not industry figures.

  • Fixed fee: 7,500 euro on hire. That is 300 euro per recruiter hour spent, invoiceable immediately.
  • Percentage of annual salary: 20 percent of 51,840 euro is 10,368 euro. Same work, 2,868 euro more, and your stake in that salary level is now visible to the client.
  • Contract staffing: client rate 55 euro, cost price 41 euro, margin 14 euro an hour. At 1,700 hours worked that is 23,800 euro, but only after twelve months and with working capital tied up along the way. If the candidate leaves after five months, roughly 9,800 euro is left.

Now lay no cure no pay over the top. Run three assignments like this at once and fill one, and you have put in 75 recruiter hours for 10,368 euro: about 138 euro an hour, against 300 euro on a guaranteed fixed fee. That is the argument for exclusivity and sharp qualification.

Moving an existing client to a different model

Model changes with existing clients usually fail because they land as a price increase. Do it in this order.

  1. Pick the moment: a renewal, a new role profile or a new department. Never in the middle of a live assignment.
  2. Walk through the last twelve months using their own numbers: how many assignments, how many filled, what they paid, what the time to fill was.
  3. Change one variable at a time. No cure no pay to exclusivity is a step, to exclusive plus an upfront payment plus a higher fee is a break.
  4. Offer a hybrid: a starting amount fully offset against the final fee. On balance the client pays no more, but does commit.
  5. Attach a fallback clause: no shortlist within the agreed window and the upfront payment comes back.
  6. Price per role group, not per client. That way nobody has to overhaul the whole relationship at once.

If you cannot have this conversation because you cannot afford to lose that client, your pricing model is not the problem, your client base is. You fix that on the acquisition side: first make sure new conversations keep arriving through cold outreach that puts meetings in your calendar, and negotiate after that.

Conclusion

There is no best model, there is a model that fits your role mix, your cash position and your client base. Choose the incentive you want to see on purpose: percentage rewards high salaries, hourly margin rewards retention, retained rewards depth, no cure no pay rewards speed and upfront selection. Write down per role group which model you use, which guarantee goes with it and when you invoice.

Want to think through which model fits your agency, or the client acquisition you need in order to say no? Book a call and we will run the numbers with your own figures.