How Much Does a Temp Agency Charge?

by Jonathan O'Brien 28. July 2010 18:31

If you've never used a temporary staffing agency and want to know what it costs, or if you want to know if you are being overcharged by yours, read on. I'll cover how a temporary staffing agency makes money and what price ranges are out there.

How am I Charged?

With temporary staffing agencies, the client needing the temp pays the fee, not the candidates (employees). As the client, you will be invoiced on a regular basis for the hours worked by the temporary employee placed at your company. You will be charge an hourly bill rate which consists of the hourly rate paid to the temporary employee by the temp agency plus a markup to cover the agencies recruiting time, payroll taxes, workers comp insurance, unemployment insurance and profit margin.

What Can I Expect for a Bill Rate?

The amount of mark up on the temp employees hourly pay rate will vary greatly by the type of position, job location and how much business you give the temp agency (volume). Generally speaking, you can expect an hourly markup percentage of between 35% - 100% on most positions.

Position Type

The skill level and available talent will affect the difficulty for the temp agency to locate a qualified individual. For example, markup on an administrative position should most certainly be lower than that of a computer programming position due to the fact it there are less computer programmers in the world than administrative workers, so it is easier to locate the first rather than the latter.

Job Location

The cost of living can vary greatly in one part of the country versus another. Therefore, candidates in one location for a particular job will require different salary requirements in another. For example, a Medical Biller in Kansas City will require less of an hourly rate than a Medical Biller in New York City.

Your Relationship with the Temp Agency (Volume)

Like most businesses, a temp agency should give a discounted mark up when a client gives exclusivity for their services or a significant volume of business. You should consider whether or not giving all your temp business to 1 agency is best for your organization, however, before doing so. If you have the same type of positions that you need temps for, then it makes sense, so long as you are happy with their quality. If you have varying types of positions or those requiring specialty skills, you should remain non-exclusive, so you can engage the services of specialty staffing firms that specialize in 1 industry or position type (i.e.: Marketing staffing firm or Medical Coder staffing agency).

How We Mark Up

At Certified Staffing Solutions, we use a transparent way of formulating and conveying the bill rate to clients. We let you know what the mark up % will be for your particular position based on the factors explained above. Many agencies will not tell you what they are paying a candidate in hopes of getting the maximum difference between what they are billing you and what they are paying a temp. We just don't feel this is conducive to growing long term relationships with our clients and candidates. Why not be open and honest? That just seems right to us. Contact Us to find out more.

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