The Federal Trade Commission's consumer guidance on job scams puts the business model in one line. "Honest placement firms do not typically charge a fee to job candidates," it says. "Instead, the hiring company pays them a fee to find qualified candidates."
That sentence settles who the customer is. A recruiter who calls you about a role is being paid by the company that has the role, either as a fee per hire or as a wage. Knowing which arrangement you are dealing with tells you what they want from the call, what they will pass along, and how much of your negotiation they can carry.
How do recruiters get paid?
Recruiters who fill permanent roles get paid in one of three ways, and the job title on LinkedIn rarely tells you which.
Contingency agency recruiters are paid only when a candidate they submitted is hired. Top Echelon, which runs a placement network and software for independent recruiters, explains in its guide to agency fee structures that the fee is "typically a percentage of the employee's first-year salary," and that on a contingency search the client "doesn't pay you until someone is hired," however much work the recruiter has done.
Retained search firms are paid part of the fee up front to run an exclusive search. The same Top Echelon guide says the total fee percentage on a retained search "is typically greater than the fee percentage" on a contingency agreement, because the searches run longer.
In-house recruiters are employees of the company that is hiring. The U.S. Bureau of Labor Statistics counts them inside human resources specialists, noting that recruitment specialists are "sometimes known as recruiters or talent acquisition specialists." The median annual wage for that occupation was $75,940 in May 2025, per the BLS Occupational Outlook Handbook.
Staffing agencies, which employ temporary and contract workers, are a separate business and get their own section below.
How much does a company pay a recruiting agency?
A company typically pays a contingency agency about a fifth of the hire's first-year salary. The cleanest published numbers come from Top Echelon's own network. For placements its members made in 2018, the average fee percentage was 21.5%, the average fee was $20,283 and the average starting salary was $93,407. Information technology placements in the same data averaged a 22% fee, or $21,956 per hire.
Those figures are old and come from one network of independent recruiters, so read them as an order of magnitude rather than a current market rate. Top Echelon's 2021 guide to agency fee structures also notes that some agencies charge flat fees instead of a percentage.
The order of magnitude is the useful part. Benchmarking data from the Society for Human Resource Management, reported in April 2022, put the average cost per hire at nearly $4,700. The samples and years differ, so the two numbers do not divide cleanly. They still suggest that an agency hire costs an employer several times what a typical hire costs. The same candidate can therefore carry a different price depending on how they arrive. A referral or a direct application carries no agency fee. An agency submission carries one for as long as the agency's claim on you lasts.
Does an agency recruiter want you to get a higher salary?
The fee structure pulls an agency recruiter two ways. Top Echelon's 2021 guide to agency fee structures says the fee is a percentage of the hire's first-year salary, and that on a contingency search the client pays nothing until someone is hired. A higher offer means a higher fee. An offer that falls apart means no fee. Which pressure wins depends on the recruiter and the deal, so judge an agency recruiter by what they do when you push.
Guarantee clauses add a third pressure. Top Echelon's guide to collecting placement fees lists the "guarantee period" among the terms a recruiter should settle with a client. The published agency terms of Mallesons, a law firm that sets out the rules agents must follow for its Australia and Singapore offices, require the agent to refund or credit its fee if the hire does not stay for "the duration of any probation period." An agency on terms like that has to refund or credit its fee if you take a role that fits badly and leave early, which gives it a reason to care about fit.
The Federal Trade Commission's job-scam guidance describes honest placement firms as paid by the hiring company, so treat an agency recruiter as a broker the employer pays. Tell them what you need in order to accept.
How are in-house recruiters paid, and whose side are they on?
In-house recruiters are employees of the company that is hiring, and they speak for it. BLS figures put the median annual wage for human resources specialists, the occupation that includes recruiters, at $75,940 in May 2025. That figure says nothing about whether a bonus rides on your offer, so do not assume anything in either direction.
When an in-house recruiter asks what you are looking for early in the process, they are asking on the employer's behalf. Four-Leaf's guide to the recruiter screen covers how to handle that question without giving away your number, and the post on what hiring managers do when you negotiate walks through what happens to a counter once you send it.
An in-house recruiter is also someone you may work alongside if you join. Keep the negotiation specific and polite, ask them how the process runs and when decisions get made, and treat their answers about timing as the employer's answers.
What happens when a recruiter submits your resume?
When an agency submits your resume, the contract between that agency and the employer decides what the submission means, and candidates rarely see it.
Mallesons publishes its version. Its terms say an agent "must not submit a candidate" without "express written permission from the candidate" for that specific role. An agent with that permission then owns the candidate for that role for twelve months. If two agents claim the same candidate, they have to settle it between themselves, and while that dispute is open "Mallesons is not required to pay any Fee."
Those are one firm's terms, and other employers write their own. They still show what is worth asking about. Under the Mallesons terms an agency needs your written permission for each role, and two agencies claiming you for the same role leave the firm free to withhold the fee while the dispute is open. Ask every agency recruiter which companies and roles they plan to send your resume to, and to wait for your written yes on each one.
What about staffing agencies and contract roles?
Staffing agencies employ temporary and contract workers and place them with client companies, which makes them a separate business from permanent placement. It is a large one. The American Staffing Association reports that nearly 2.2 million temporary and contract employees worked for U.S. staffing companies in an average week in 2024. The association also reports that 64% of staffing employees work in the industry to fill the gap between jobs or to help them land a job.
For anyone using contract work as a bridge, the clause to ask about is conversion. Top Echelon's 2021 guide to agency fee structures describes how an agency can charge a client that wants to hire a contractor permanently, one option being the usual placement fee prorated against how long the contractor has already worked. A client facing that fee may wait for it to shrink before converting you. Asking the agency how conversion works before you start tells you what the "temp-to-perm" in the listing actually means.
What is overrated
Advice that treats every recruiter the same way is overrated, whether it casts them as your advocate or as an obstacle. The payment model is a better guide than either label. A contingency agency is paid when a candidate it submitted is hired, a retained search firm is paid a retainer up front and further payments later, per Top Echelon's 2021 guide to agency fee structures, and an in-house recruiter draws a wage from the employer. Three payment models give three people different reasons to want the same offer signed, and different limits on what they will push for.
Five steps for working with recruiters
- Ask how they are paid in the first call. "Are you in-house or with an agency, and is this retained or contingency?" is a normal question, and the answer frames everything after it.
- Give permission per company, in writing. Never let an agency send your resume anywhere you have not approved by name.
- Keep a list of where each agency has sent you. If two recruiters offer to submit you for the same role, pick one, because under terms like the Mallesons agency terms a double claim leaves the employer free to withhold the fee while the dispute is open.
- Share your requirements, and keep your history. Tell recruiters what you need to accept. Your current pay and your other offers are leverage you spend once.
- Rehearse the money conversation out loud. Four-Leaf's salary negotiation coach runs voice practice scenarios in which an AI recruiter asks for your number first, or holds base salary at the top of the band and waits to see whether you ask about anything else, so the first time you hear those lines is not the real call.
Where this is heading
A recruiter conversation is easier to read once you know who pays for it, how and when. That fact matters more than the recruiter's title or tone, and it takes one question to find out. The candidates who handle recruiters best know which kind is on the line, and say what they need without saying what they would settle for.