How much does a headhunter or recruitment agency cost?

You’re about to sign off on a search and your CFO asks the question that always comes up: “So how much is this going to cost us?”. It’s a fair question. Hiring a headhunter is an investment, and like any other you should be able to explain it before you commit.

The short answer is that almost every recruitment agency charges a percentage of the gross annual salary of the person you end up hiring. The useful answer is a bit longer, because two proposals with the same percentage can end up costing very different amounts depending on which salary it applies to, when it is paid and what the price includes.

How fees are calculated

The most common formula is simple: fee = annual salary of the person hired × agreed percentage. The percentage is set before the search begins, and the final figure isn’t known until an offer is accepted, because it depends on what is negotiated with the candidate.

That percentage isn’t the same for every role. It rises with seniority and with how hard the search is, and it is usually higher in Executive Search than for specialists or middle managers. For some leadership searches, instead of an open percentage, a fixed fee is agreed up front, which gives both sides more certainty.

Many agencies also set a minimum fee, so that a search for a role with a lower salary still makes sense for them. If the proposal includes one, that’s normal. What isn’t normal is finding out when the invoice arrives.

Which salary, exactly

This is where we see the most misunderstandings, and nearly all of them can be avoided with one line in the contract. These are the points worth settling:

• Whether the fee applies to annual base salary only or to base plus target bonus.
• What happens with a sign-on bonus or a one-off payment to compensate for what the candidate leaves behind.
• Whether benefits in kind count, such as a car, health insurance or training. Usually they don’t.
• How equity or stock options are treated. Most contracts leave them out, but it’s better if it’s written down.
• Which salary is used if the offer changes in the final negotiation. It should be the signed offer, not the initial range.

Three worked examples

The percentages below are only there to illustrate the calculation. They are not a rate card, and in your case they will depend on the role and the agreement.

A Data Engineer on a €55,000 base salary. With a fee of 20% of base, the invoice would be €11,000 plus VAT. If the contract also included a €5,000 target bonus, the base for the calculation would be €60,000 and the fee €12,000. A thousand euros’ difference from one line that often nobody reads.

A Financial Controller on €70,000 base plus a 10% bonus. At 22% of base only, the fee would be €15,400. On base plus bonus (€77,000), €16,940. If the salary goes up to €74,000 in the final negotiation, the fee is recalculated on the signed offer.

A CFO on a retained search. Say the package is €130,000 base plus €30,000 target bonus, and the fee is 30% of the total, i.e. €48,000. Paid in three equal instalments, that would be €16,000 at the start, €16,000 when the shortlist is presented and €16,000 when the person joins. With a fixed fee agreed at the start, the figure would be known from day one.

What all three examples show is that the percentage is only half the information. The other half is the base it is calculated on.

When you pay

That depends on the model. On contingency, the agency only invoices if you hire a candidate it introduced, and it does so at a point set in the contract: when the candidate accepts the offer in writing or when they start. Weeks can pass between the two, especially if the person has a long notice period, so it’s worth knowing which date applies.

In retained searches, more common for leadership roles, payment is split into instalments tied to the progress of the search. We explain the differences between these models, and when each one fits, in our article on contingency, retained search and RPO.

Check the payment terms on each invoice too, and what happens if the candidate accepts the offer but never actually joins. A well-drafted contract covers it.

What the price includes

In a full headhunting service, the fee usually covers defining the profile with the hiring manager, direct search for candidates who aren’t actively looking, interviews and assessment, a short shortlist with a report on each candidate, coordinating interviews and feedback, support with the offer and negotiation, and a replacement guarantee if the person leaves in the first months. We cover how that guarantee works in this article.

What is sometimes charged separately: external tests such as a psychometric assessment from a specialist provider, travel if the search requires in-person meetings in another city, or paid job board ads. None of that is unusual. It just needs to be written down before you start.

What pushes the price up or down

When two agencies quote different figures for the same role, they’re usually weighing these factors differently:

1. Seniority. A C-level search takes more hours, more discretion and more assessment than a specialist one.
2. Scarcity. If few people fit and almost all of them are happy where they are, the search is longer and more hands-on.
3. Confidentiality. A search that can’t be advertised or talked about is done entirely through direct approach.
4. Urgency. A very tight deadline means committing more resources from day one.
5. Exclusivity. When a single provider runs the search, it can commit more time. We go into this in our article on exclusivity.
6. Volume. If you hand over several roles at once, it’s reasonable to negotiate different terms from a one-off search.

How to compare two proposals

The most common mistake is going for the lowest percentage without looking at the rest. A cheaper proposal that only posts ads and forwards CVs can end up costing more than one with a higher percentage that presents three well-assessed candidates within a few weeks. And a vacancy that stays open also costs money every week, as does a hire that goes wrong. We wrote about that in the real cost of a bad hire.

Our practical advice: before comparing, ask each provider to calculate their fee using the real salary range for your role, and to set out in the same document when they invoice, what’s included and what guarantee they offer. With that in front of you, the comparison stops being about percentages.

At Mimmic Talent we send you the approach, timing and terms in writing after a first call, with the replacement guarantee included. If you’d like to see what it would look like for your role, tell us what you need.

Frequently asked questions

How much does a headhunter charge in Spain?

Most commonly a percentage of the hired person's gross annual salary, agreed before the search starts. The percentage depends mainly on the seniority of the role, how scarce the profile is and the engagement model. For leadership searches, a fixed fee paid in instalments is also common.

Are fees calculated on base salary only or on bonus too?

It depends on the contract. Some agencies apply the percentage to annual base salary only, others to base plus target bonus. The proposal should state it in writing and include an example calculated with the real salary range for the role.

When do you pay a recruitment agency?

On a contingency basis, the agency invoices when the candidate accepts the offer or when they start, as agreed. In retained searches, typical for leadership roles, payment is split into instalments: one at the start, one at a milestone and the rest when the person joins.

What does a headhunter's fee include?

Usually defining the profile, direct search for candidates, assessment, a shortlist, interview coordination, support with the offer and a replacement guarantee if the person leaves in the first months. External tests or travel may be charged separately, so ask.