The money · Lesson 5 of 18 · 8 min
A contract desk earns a margin per hour and the arithmetic is arithmetic. A perm desk earns whatever it negotiated, on terms it wrote down or failed to — which makes pricing and paperwork the commercial core of the model rather than admin around it.
The previous lesson was mostly about hourly economics, because that is where the money is lost on a contract desk. Perm loses money somewhere else entirely: in a fee that was discounted before anyone asked, a definition of “salary” nobody wrote down, a candidate introduced with no ownership clause, and an invoice sitting unpaid because it lacked a purchase order number.
None of that is difficult. All of it is decided before you start working the role.
You will start with the first and should know the rest, because the most reliable way to raise what you earn per client is to move up this list rather than to raise your percentage.
A percentage of the candidate’s first-year compensation, invoiced when they start. No fee if nobody is hired.
A fixed amount per placement regardless of salary, agreed in advance.
Part of the fee up front, the rest on placement — sometimes a third at engagement, a third at shortlist, a third on start.
The client pays in instalments across the search whether or not it results in a hire, and you work the role exclusively.
A recurring monthly fee for an agreed scope — a number of searches, a number of hours, or a dedicated share of your week — usually with a term of several months and either no placement fee or a much reduced one.
A fee when a client takes a contractor onto their own payroll — flat, a percentage, or a sliding scale that reduces with the contractor’s tenure and eventually reaches zero.
The fee conversation goes wrong in one predictable way: it happens too late, apologetically, and the recruiter discounts before being asked.
Check yourself
You agreed a percentage fee on “first-year compensation”. The candidate accepts a base salary plus a guaranteed first-year bonus and a sign-on. What determines your invoice?
A client asks you to reduce your fee before you have submitted anybody. What is the better response?
In rough order of when each becomes relevant. The first one is non-negotiable; the second is the one experienced recruiters wish they had started doing sooner.
Terms of business (client services agreement)
The master document, signed once per client before you submit anybody. It carries the fee basis, the definition of compensation, the guarantee, candidate ownership, payment terms, liability and how either side ends the relationship. Have an attorney draft or review it once; you will use it for years.
A signed job order for each role
The most skipped document and one of the most useful. A short confirmation per role: title, the agreed compensation range, the fee that applies, the process, the guarantee. It prevents the argument that begins “we thought that role was at the other rate”, and it takes five minutes.
Candidate introduction and ownership
The clause that says a client who hires someone you introduced owes you a fee, and for how long after the introduction. Without it, an introduction is a gift. Some agencies also send a short confirmation of introduction per candidate — belt and braces, and cheap.
Vendor onboarding paperwork
For anything larger than a small business: a W-9, a certificate of insurance, banking details, sometimes an NDA, sometimes their own master services agreement instead of your terms. Start this the day you agree to work together, because it routinely takes longer than the search does.
A purchase order, if they use them
Many larger organisations will not pay an invoice that has no PO number on it, and will not tell you that until the invoice is thirty days old. Ask during onboarding whether a PO is required and get the number before you invoice.
The offer confirmation
Once an offer is accepted, get the details in writing from the client: start date, actual compensation, job title. This is what you invoice against, and it is the moment to notice that the agreed salary moved during negotiation and your fee should have moved with it.
A perm desk has no payroll to finance, which is the great advantage of the model — and it is not the same as being paid quickly. The sequence is: weeks of search, an offer, a notice period that may run a month or more, a start date, then your payment terms.
From starting work to holding cash is routinely several months on the first placement with a new client. Plan the first year around that rather than around the fee value, and see the next lesson for the contract-side version of the same problem, which is larger and recurring.
The guarantee attached to every one of these fees — replacement, refund, or something in between — gets its own lesson at the end of the course: the first 90 days and the guarantee.
Key takeaways
Most commonly as a percentage of the candidate’s first-year compensation, invoiced when the person starts, with no fee if nobody is hired. The alternatives are a flat fee per placement, a container or engaged search where part is paid up front, a retained search paid in instalments regardless of outcome, and a monthly retainer covering an agreed scope of ongoing hiring. Actual fee levels vary widely by seniority, vertical and market, so treat any single percentage you see quoted online as someone’s marketing rather than a benchmark.
A signed terms of business or client services agreement covering the fee basis, guarantee, candidate ownership and payment terms — signed before you submit anyone, not after. Then per role, a short signed job order confirming title, salary range and applicable fee. For larger clients add vendor onboarding: a W-9, certificate of insurance, sometimes their own master services agreement, and a purchase order number if they require one. Finally, written confirmation of the accepted offer, which is what you invoice against.
Yes, and it is an established model — the client pays a recurring monthly fee for an agreed scope of hiring support, often with no placement fee or a reduced one, typically on a multi-month term. It suits clients hiring continuously who dislike unpredictable per-placement costs, and it gives an agency revenue before a placement lands. The thing that decides whether it works is scope: define how many live roles are included, what happens beyond that, the notice period, and whether unused capacity carries over.
Early, plainly, and before you do any work. State the number and its basis in the first substantive conversation, as a fact rather than a proposal — the fee is what the service costs. If they push back, do not discount reflexively; ask what would need to be true, and trade any reduction for exclusivity, a committed decision timeline or a larger volume commitment. Then get it signed before you submit a candidate, because your leverage is highest before they have seen anybody.
Normally on the candidate’s start date, with payment terms running from there. Some agencies invoice on offer acceptance, which is more aggressive and worth agreeing explicitly if you want it. Whichever you use, invoice the same day the trigger happens, include the purchase order number if the client requires one, and know that a perm desk still has a long gap between doing the work and holding the money — the search, then notice period, then terms.
Finished this lesson?
Next: The cash flow trap, with a calculator
Progress is saved in this browser only — no account, nothing sent anywhere.