What Is Perm Fee (Placement Fee)?
A perm fee, or placement fee, is a one-time fee a client pays a staffing or recruiting firm when a direct-hire placement is completed, commonly structured as a percentage of the placed candidate's first-year compensation, collected once at or shortly after the hire rather than as the ongoing per-hour markup a temp or contract placement generates for the life of the assignment.
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A perm fee, or placement fee, is a one-time fee a client pays a staffing or recruiting firm when a direct-hire placement is completed, commonly structured as a percentage of the placed candidate's first-year compensation, collected once at or shortly after the hire rather than as the ongoing per-hour markup a temp or contract placement generates for the life of the assignment.
Perm Fee (Placement Fee) explained
The perm fee model and the temp markup model reward the firm on completely different timelines. A temp placement pays out gradually, every hour the worker is on assignment, but stops the moment the assignment ends. A perm fee pays out once, at the point of hire, and the relationship with that specific placement is largely over from a revenue standpoint once the fee is collected.
Whether that one-time fee is contingent (paid only if a hire results) or retained (paid upfront and in stages regardless of outcome) is a separate, structural decision that shapes the whole engagement, not just the fee itself. A firm running contingency searches is competing against every other recruiter also working that same open role, since nothing is owed to anyone until somebody places a candidate.
Perm fee structuring is a live, ongoing conversation in the industry rather than a settled default. How the percentage is set, what triggers it, and how guarantee periods are handled if a placed candidate leaves early all vary firm to firm, which is why a clear, written perm fee agreement matters as much as the headline percentage itself.
Why it matters when you're buying
A discovery meeting with a client who assumes every placement works like a temp markup, paid gradually, low commitment, is a different conversation than one who already understands they are agreeing to a one-time fee tied to a direct hire. Confirming which model the client actually expects before the meeting avoids a mismatch that stalls the deal.
Frequently Asked Questions
What is a perm fee in staffing and recruiting?
Is a perm fee the same for every placement?
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