The Recruitment Industry’s Pricing Problem
Imagine if restaurants charged you based on your salary instead of the value of your meal. Sounds absurd, right? Yet that’s exactly how the recruitment industry prices its services.
For decades, we’ve clung to the percentage-of-salary model like it’s sacred text. It made sense in 1980, but so did shoulder pads and fax machines. The problem isn’t just that it’s outdated – it’s that it creates the wrong conversation with clients and puts us in a defensive position from the start.
Here’s what nobody talks about: when you drop your fee from 20% to 15%, you’re not taking a 5% hit – you’re taking a 25% revenue cut. That’s not a small concession; that’s a quarter of your revenue walking out the door. And for what? Because someone asked for a discount?
The solution isn’t to hold firm on percentages. It’s to completely reframe how we package and present our services. Enter the Good-Better-Best framework.
Think about how Apple sells iPhones or how car manufacturers offer different trim levels. Nobody walks into an Apple Store and tries to negotiate 20% off the iPhone’s price. Instead, they choose the model that fits their needs and budget.
The same approach works in recruitment. Three clear service tiers, each with distinct value propositions. The basic package might include standard search and screening. The middle tier adds specialized market mapping and candidate assessment. The premium tier delivers the full executive search experience with additional guarantees and services.
But here’s the key: you have to show all three options together. It’s not about forcing everyone into the premium tier – it’s about giving clients the power to choose while demonstrating the full scope of your capabilities.
When you present options this way, something magical happens. The conversation shifts from “Can you do it cheaper?” to “Which package best suits our needs?” You’re no longer defending your pricing – you’re consulting on service levels.
This isn’t just theory. Modern professional services firms have been doing this for years. Law firms don’t charge based on their clients’ revenue. Management consultants don’t price projects as a percentage of potential savings. They package their services based on value and expertise.
The recruitment industry needs to catch up. We need to stop apologizing for our fees and start articulating our value. Break down your recruitment process. Show the work. Demonstrate your expertise. Price based on the value you deliver, not on your client’s salary scales.
Is it a perfect system? No. But it’s better than letting your revenue ride the percentage rollercoaster. And more importantly, it positions you as what you really are: a professional service provider delivering real value, not just a percentage-based transaction processor.
The future of recruitment pricing isn’t in better percentages. It’s in better packaging, better communication, and better alignment between price and value. The only question is: who’s going to lead the change?