The fee agreement

The most important document you will send

A fee agreement is a short commercial contract, usually two to five pages, that every client signs before you submit a candidate. Skipping it is the one unforced error that can erase months of work: without signed terms, your fee percentage, your guarantee, and your ownership of the candidate are all just conversation topics. The industry norm is direct-hire fees of 15 to 30 percent of first-year salary with 20 percent the most common rate (Pin.com, HireCruiting), and corpus operator material describes engineering placements running 20 to 25 percent.

Walk the six clauses that matter.

1. Fee percentage and fee basis: the number, and what it multiplies. Base salary is the standard basis. If a client offers total compensation, equity and bonus included, the fee shrinks in practice, because the same percentage on a smaller number is a smaller fee, or inflates unpredictably. Define the basis as first-year base salary and the percentage on top of it.

2. Payment terms: the operator default is net-10, the fee due within ten days of the candidate's start date, a default that shows up in member firms' own policy language in an NPAworldwide guarantee roundup (NPAworldwide), stretching to thirty for clients who negotiate. Net terms beyond thirty are a working-capital loan from you to the client. Decline them at the size of company that can pay faster.

3. The guarantee: what happens if the hire leaves early. Survey data puts most guarantees inside the 30-, 60-, or 90-day windows, with 90 days the single most common, and the remedy is typically a free replacement or a prorated refund (TopEchelon). Fight for replacement over refund: a replacement costs you time, keeps the client whole, and keeps the relationship, while a refund hands back cash and closes the story.

4. Candidate ownership: how long a submitted candidate remains yours if the client hires them later. Six to twelve months is typical operator ground. Without this clause, a client can interview your candidate, say no, and quietly hire them in month four.

5. Exclusivity, theirs or yours: some agreements promise the client you will not represent competitors. Give this away rarely and knowingly.

6. Offset: the nastiest client trick is the offset clause, letting them dock your fee against fees they owe another agency on the same hire. If you see it, strike it or price it.

Holding your number

The negotiation is won in preparation. Corpus trainer guidance is unambiguous: hold the fee, because undercutting does not win the respect of clients, it wins their contempt, and the recruiters who discounted their way in were treated as transactional vendors from that day forward. The same material holds its trainer's own floor at twenty percent; this course teaches the more conservative version, never below fifteen, with any discount carrying a stated condition: more roles, prompt payment, or a named partnership treatment. "We will only use you" earns nothing by itself, in that telling, because exclusivity without volume is a promise, not payment.

When the client asks why the fee is high, the corpus rebuttals are worth having in your pocket, adapted to your voice:

We are a finder's fee, same as the agencies you already use. The difference is you pay nothing unless this person signs and starts. Your own team interviews, references, and decides. The fee buys the candidate you could not reach, not the decision you already own.

And when they push the guarantee to something long:

I will extend the guarantee to ninety days with a free replacement. What I will not do is refund in full, and here is why: once your candidate starts, you own their experience, their manager, and their workload. If the role changes or the budget moves, that should restart the search, not invoice me for work I completed.

The posture throughout is the one from "Fit check: who this business fits": kind and immovable. The client is testing how you will negotiate when the stakes are their hire, and the fee conversation is your audition. A client who bullies you to fifteen percent in week one will bully you about guarantees in month three. That is information about the client, and what to do with it gets covered later in the course.

A workable skeleton

Reputable model agreements exist, including the ASA/NAPS model discussed in "Licenses, contracts, and the law," and one hour of attorney review turns a template into your standard. The bones you want:

This agreement covers direct-hire placements of candidates submitted by [Agency] to [Client]. The placement fee equals twenty percent of the placed candidate's first-year base salary, due within fourteen days of the candidate's start date. Placements are guaranteed for ninety days from start, with the remedy being a free replacement search. Candidates submitted remain attributable to [Agency] for twelve months from submission. Fees are not contingent on the candidate's continued employment beyond the guarantee period.

Adapt, get it reviewed, then reuse it with near-zero marginal effort. The signed agreement turns your outreach into a business with a pipeline.