Ever hired through a recruitment agency, only to realise the final cost was much higher than expected?

You’re not alone. The commission-based recruitment model is notoriously opaque, with many employers unclear on exactly what they’re paying for.

Unlike industries where pricing is upfront and predictable, recruitment agencies often avoid discussing fees openly—because if employers really understood how the model works, they’d start questioning whether it’s worth it.

Why Commission-Based Recruitment Lacks Transparency

The traditional agency model operates on a contingency basis, meaning recruiters only get paid if they successfully place a candidate. That fee—typically 20-25% of the new hire’s salary—is often presented as a standard industry rate, without much explanation of what it covers.

But here’s the reality:

• Fees are rarely as straightforward as they seem. Many agencies use a sliding scale commission structure, where the placement fee increases significantly once a candidate's salary crosses a certain threshold. A small salary increase can result in a massive jump in fees, leaving employers paying far more than they anticipated.

• Placement fees are tied to salary, not effort. Whether a recruiter spends one hour or one month on a search, their fee is based on what you pay the hire—not the work involved in finding them.

• Candidate salaries are often negotiated with commission in mind. Recruiters operating on commission have an incentive to push for a higher salary, not because it benefits the employer or candidate, but because it increases their fee.

• A small increase of $5,000 from $195 000 to $200 000 can push the salary into the next threshold, increasing the placement fee significantly.

• This pricing structure benefits agencies, not employers. The more complex and variable the pricing, the harder it is for businesses to accurately budget for recruitment costs.

How This Model Fails Employers

Beyond the lack of pricing clarity, the commission-based approach leads to several fundamental flaws in the hiring process.

• Recruiters are incentivised to push candidates, not advise against bad hires. Because their income depends on placements, agencies are less likely to tell you when a candidate isn’t a great fit.

• Employers have no control over costs. Since fees are tied to salaries and can escalate unpredictably, businesses often end up paying far more than they anticipated.

• The process feels transactional, not strategic. Commission-based recruiters focus on closing deals, not building long-term hiring strategies. Once the placement is made, the relationship often ends.

For employers, this model means less visibility, less trust, and higher costs—without necessarily getting better hiring results.

A Better Way: Transparent, Fixed-Pricing Recruitment

Companies are now moving away from commission-based hiring in favor of transparent, fixed-pricing models that allow them to:

• Know the cost upfront. No surprises, no unexpected invoices—just a clear price for recruitment services.

• Pay for the work done, not the salary of the hire. Instead of fees fluctuating based on candidate salaries, costs are based on actual recruitment effort.

• Ensure recruiters act as true hiring partners. Without commission incentives, recruiters focus on advising employers properly, rather than pushing placements to secure a fee.

This shift allows businesses to regain control over their hiring budgets while ensuring that recruiters are working in their best interests—not just chasing revenue.

The Future of Recruitment: No More Hidden Fees

For too long, businesses have accepted unclear, unpredictable recruitment costs as standard. But hiring shouldn’t be a guessing game.

Employers deserve clear, upfront pricing, aligned incentives, and a hiring model that prioritizes quality over commissions.

The solution? Moving away from placement fees and commission-based recruitment—and toward a hiring approach that’s built on transparency, fairness, and real hiring success.