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Format to bill client for Staffing

very often i get questions from recruiters and people that are looking to start their own recruiting agency hey how do i build my client like once i get that new client on the line where do i go from there so let me go ahead and explain to you in this video the different ways that you can bill your client when you have a deal in the works so number one you have the traditional attempt to hire what you call contract staffing and in that format the way it goes is you negotiate a contract bill rate with your hiring manager with your client and you also negotiate a direct labor rate or a pay rate with your candidate so typically that direct labor rate is negotiated ahead of time with your candidate you want to lock that down make sure you and your candidate are very clear on that rate before you start pitching bill rates to your client because then you can you know basically adjust your gross margin understand what your profit margin's going to be every week what you call your weekly spread is the common term in recruiting that's a very lucrative model i've done that for many years i've owned companies scale them using that billing structure it's almost like being a landlord and having properties and people renting and you're collecting checks every month in this instance you're collecting revenue every week with your net spread so the calculation for that i'm going to include below in this video but very simply you take your direct labor rate what you're paying your candidate you're going to multiply that times what we call your payroll burden would it cost you to carry that person on your payroll because they are going to be a w-2 employee with your company you're going to have workers compensation costs you're going to have general liability insurance costs suda fica all that great stuff and you're going to subtract that total cost from your bill rate that you negotiated with your client and then multiply that number times a 40 hour work week so for the most part you really want to get contracts where the client is committing to 40 hours a week in billing and that's how you get your net spread profit for that candidate every week that's how you do that okay moving on the next one would be direct hire traditional headhunting you're probably familiar with this so pretty simple all you do is negotiate a percentage of salary for your candidate so you would just tell your client you know mr client we're going to charge you 30 for this project manager salary um i like to work within a 25 to 30 percent percentage fee range a lot of folks out there in my space will pitch to you that you should start at 10 percent or 5 or 15 i wholeheartedly disagree with that theory i think you're leaving money on the table you are uh positioning yourself as a flea market recruiter you're letting your client know that you can just work for pennies on the dollar i would not go there it sets a really bad precedence going forward so always start at 30 you can always work down worst case scenario to like 22 and a half percent if you had to but i typically like to come in at 25 between 30 on an annual salary and then from there you have to throw in some guarantees your clients got to ask you hey what's your guarantee you want to make sure you have a really well written contract which we provide for our members as to what your guarantee is whether it's 90 days six months a year what's going to happen should that candidate get terminated should they quit there's quite an investment from your client's side they're going to want to protect their investment okay so moving along the engage search i absolutely love i incorporated this method and strategy into my recruiting business many years ago i wish i'd done it a lot sooner but this is when you basically have your client put skin in the game right they are they are more vested than they would be with working on the direct hire side or the contract to hire side which we just covered and the way this works is once your client gives you a new job a new wreck you tell the client okay great we are going to collect dollars 2500 front five thousand dollars up front whatever that number is i think it's wise to keep it between twenty five hundred and five thousand uh mr manager what this does we're not interested in making money off that engagement fee for us it tells us that you're serious about filling this role meaning that when my recruiters you know work around the clock come in on saturday and sunday and lock down a very good candidate we submit that candidate over to you we feel a lot more confident that you're going to move forward in interviewing that candidate and getting that candidate to closure mr manager understand in the past we've had you know some frustrations and headaches with some clients who have given us requisitions we've worked you know weeks to find great candidates spend time and money to find out that budget approval fell through or to find out they found an internal candidate they promoted and we lost a lot of time and money in that in that exercise which is why we work on engaged search i hope you understand and also mr manager understand with the engaged search we are much more engaged you are a priority in our business our recruiters are commission driven so they're excited to come to work every day and work on your opportunity i promise you're going to have an a player candidate with this structure that's how you pitch that so then with the guarantees on engaged search what i tell my client is within 30 to 45 days if we don't submit at least one viable candidate to you that you agree as a good candidate we will refund you that 2500 okay i've never had to do that by the way but that's the guarantee that i throw in and make it even better for you mr manager you have nothing to lose in this scenario because once we find the candidate for you and we place the candidate we're going to go ahead and refund that 2500 on your first invoice uh for the candidate so you know for example if you made ten thousand dollars on that candidate you would go ahead and deduct 2500 on that first invoice so if the client has a problem with that typically it's a red flag and it's better to know up front to not work with that client it tells me that they're going to just you know use you and they're in touch with five or six other recruiters so it's a really good test when you get a new client on the hook if they're willing to to pay that engagement fee that's how that works uh the last one is executive retained search which i'm currently doing that's like the pinnacle of my career it's where you want to get to in my opinion because that's when you're dealing with fees of over 50 000 over a hundred thousand dollars for making one placement um and you're collecting a third of the payment up front so it's a third a third and a third and i call it performance-based recruiting so you're letting your client know you know look your dollars are not at risk here so much because we're not going to bill you that second installment until we perform for you until we send you at least two to three viable candidates that you agree you want to hire one of them at that moment we will send you the second invoice for a third of the total sum of what we negotiate i also negotiate 30 with those scenarios a lot of times with executive retain search it's higher level roles that you're working with you know vp level and above is what i've noticed so i hope that helps guys again i'll put the formula down here for the contract contract to hire staffing building structure and happy hunting