What do staffing agencies charge their clients

A staffing firm can prescreen and qualify candidates to ensure the manager is always interviewing candidates that are a fit for the role. AJ Brustein, CEO and co-founder of on-demand staffing platform Wonolo , said that many companies are holding back on hiring for full-time positions for several reasons.

However, a focus on leaner operations has a lot to do with it, Brustein said. Temp staffing allows them to only have people when they need them, and those people are being productive. Jason Leverant, chief operating officer of national staffing franchise AtWork Group , said employers have come to realize the value of having a fluid workforce that can be dynamically adjusted to meet their hiring needs on an ongoing basis.

There are a lot of legal responsibilities involved with being an employer, like covering certain taxes, providing insurance coverage and following labor laws.

From a financial and operational standpoint, hiring employees also comes with financial risks, especially if someone has to be fired or unexpectedly leaves. When you use a staffing firm, the agency assumes many of these liabilities for you. In a blog post on Snagajob , author Amy White outlined the major types of jobs that staffing agencies help companies fill: temporary an assignment with a set start and end date , temp to hire an assignment that's initially temporary, but is used to help an employer determine the temp worker's long-term fit with the company and direct hire a permanent position in which the staffing agency acts as a recruiter.

White also explained the process of how staffing companies fill positions. If the agency doesn't have an existing employee who is a good fit for an open role, it will typically advertise the position on job boards and other places job seekers would likely look. From there, it will accept applications and conduct interviews and a background check if required, just as any other employer would.

Once the right candidate is found, that person is hired as an employee of the agency except in the case of direct-hire positions. The worker's paycheck and benefits, if offered, are issued by the staffing agency, but the length of employment is determined by the client, White said. Alternatively, you can sign up for on-demand hiring platforms like Upwork , Freelancer. These platforms operate a bit differently, in that workers who come through these sites are considered independent contractors — you're responsible for paying them directly and issuing a tax form at the end of the year.

However, as with staffing agency employees, you are still relieved of official employer obligations payroll taxes, benefits, etc. Key takeaway: Staffing agencies help fill temporary positions, temp-to-hire positions and direct-hire positions by matching existing employees who are well suited for the role or advertising the role for qualified job seekers to see.

One of the most widespread misconceptions about hiring a staffing agency is that it's too expensive to be worth it. Why pay extra in recruiting fees when you could hire someone yourself? You might think you're saving money upfront, but in the long run, using a staffing agency might save your company money.

The longer a position is open, the higher the cost, due to a loss in productivity and diverting resources. Working with a staffing firm can help decrease the time to hire and help decrease a loss in productivity. The other common myth about staffing firms involves the quality of their employees. Some companies may believe that workers who come through staffing agencies are only there because they couldn't get hired anywhere else.

That's not necessarily the case; in fact, temporary employees are often overqualified for the jobs they're doing, Brustein said. Ready to hire a staffing company? Find the right one, and with our experts' advice, start a great professional relationship. Before you can find quality employees, you have to choose a staffing firm that's right for your business. Leverant emphasized the importance of finding a company that has a stellar reputation for abiding by good business practices.

You also want to make sure that they are carrying the proper insurances, including general liability and workers' compensation insurance. Developing relationships with potential clients and maintaining relationships with current clients will actually pay a large part of pricing staffing services for your agency. You might want to cater your pricing strategy for your repeat clients to be a slightly lower markup because you want to make it easy for them to continue using your staffing firm.

For example, if your normal markup for a particular type of client and service is 12 percent, you might want to make it 8 percent for repeat clients of high importance. Since staffing agencies perform a service, keeping customers happy is crucial for long-term success. If you are providing IT workers through your agency, your markup might be higher than if you were working to fill clerical or administrative positions. This fee can be established from the salary amount that the permanent employee would make.

Before you decide how exactly you will price you staffing agency services, you need to make sure that your business generates enough of a profit to meet payroll.

This can be a challenge that startup staffing companies experience because many customers have long payment terms. However, this example provides a solid benchmark to use when examining the amount of profit that a staffing agency makes on the bill rate that they charge.

Below are some commonly used billing terms, including those used in the example above, and their definitions:. Hourly Bill Rate: Rate charged to the client. Net Profit : What the staffing company earns after all expenses are paid. So, there you have it! The real scoop on what goes into a staffing bill rate. Or, contact us directly at We are more than happy to answer any of your questions about billing or anything else! Katy is an exceptional representative for Advent Creative Group, and for me.