Contract Staffing Fee
The basic fee model for staffing companies that provide contract professionals is as follows:
The mark-up is generally a percentage of the pay rate through which the staffing agency recovers its costs and profits. It consists of many components, including:
- “Burden” (taxes, benefits, workers compensation insurance, etc.)
- Recruiting personnel costs
- Overhead/General & Administrative costs
- Profit margin
How the pay rate is determined
In common practice, the hourly wage of the client’s regular employees is used as a guide in setting pay rates, or when that is not available, available market salary data. With this formula, the cost of temporary labor to clientfirms is typically the same or very close to the hourly wage of their regular employees in the same job positions. Of course, highly specialized consultants negotiate and command higher pay rates.
How the mark-up is determined
The mark-up and bill rate may differ from assignment to assignment, as they take into account many factors such as the availability of talent, ‘going’ market pay rates, volume of business with the client and length of assignment. In addition to the tangible costs associated with contract professionals, the client should feel confident that they are receiving intangible value for their payment. In other words, they are supporting expertise in a particular subject area as well as the effort to constantly recruit, evaluate, and interview candidates. By building a rich candidate pool, Saraswathy is able to present an appropriate match, quickly, when an order comes in.