Lowering your fees to beat the competition is a strategy that’s rife in recruitment, and it’s a problem the industry has been battling with for years. And I get it – with so much competition out there, it can be really tempting to take the hit just to get a job on. But this is not the way to hit your numbers!
In reality, lowering your fee to stay competitive not only negatively impacts your income, but it undermines your value as a recruiter too. Achieve success through merit, not because you’re undercutting your competitors! It’s not good for your morale and motivation in the long run and tactics like this only cause problems for the industry as a whole.
Why you should never lower your recruitment fees
Here's a short video of me explaining why I think you should never lower your fees when negotiating with a client:
But now here's the million-dollar question: what can you do to avoid lowering your fees but still remain competitive in the recruitment market?
1. Walk away
If you believe your fee is an accurate reflection of the great service you’re offering to clients, don’t be afraid to retain your value by walking away from the job.
If you’re asked to lower your fees, the chances are the job won’t be worth working anyway as you’ll be up against twenty other agencies who have probably all been asked to lower their fees too. It’s a rat race that you really don’t want to get into.
Ask yourself this question: Why would the client be using agencies at all if they weren’t struggling to find talent? If you have the skill set to find the talent your competitors can’t reach on their own then you’re worth every penny, and you’ll save them time and money in the long run by starting right-fit candidates who are invested in the company.
2. Be a RWK (Recruiter Worth Knowing)
A lot of recruiters make the mistake of saying ‘we are different’ without actually providing any proof to back it up. If you can demonstrate that you’re the go-to expert recruiter for sourcing candidates within your niche, your clients should have no qualms with paying your fee, as they know they’re securing the best possible chance to land that ideal candidate in less time.
It’s a candidate-led market, so find the candidate you know they’re looking for first and then negotiate your fee. If you’re consistently finding candidates that your competitors can’t, your clients will keep returning to you and the referrals will start coming in too. Essentially, if you’re a RWK, the idea of lowering your fee shouldn’t even make it to the table.
3. Help clients understand what they’re paying for
De-bundle all your different recruitment services and present this to the client so they understand the stellar service you have to offer. A lot of recruiters put in all this extra work for free, but if you highlight all these different areas to the client, they should be able to understand why you charge what you charge – and respect that.
The industry is becoming more and more competitive, so what are you and your company doing differently that shows you’re worth the investment? Do you provide video interviews or personality profiles for your candidates? The industry has great tech out there that can help you operate at a different level. It’s time to think outside the box and offer something different – make sure you understand and own your USP before you pick up the phone to speak to clients and prospects.
4. Offer a no-frills service
If your client is still adamant that your fee is too high, suggest removing certain parts of the service to make it more affordable for them and see how they respond.
For example, maybe you propose you only post the job ad across job boards to let active candidates find and apply for the role themselves. A service with no search or headhunting involved simply doesn’t work in a candidate market, and highlighting what a no-frills service would look like will communicate your value to them.
If you position this to your client in the right way, their FOMO (Fear of Missing Out) will take over and they’ll probably agree to pay your fee in full. They wouldn’t be open to the idea of working with an agency if they were satisfied with the applications they’re getting from job-seekers!
In short: Value yourself!
Your time needs to be worked around roles that actually value your time. Your fees will reflect what your time means to you as a recruiter, and this is fundamental failing of new recruiters that stack the jobs high in a competitive market.
Work the roles that you know will bring you fees for your hard-earned work - your boss won’t thank you for you working twenty roles in a month against twenty other agencies and still no money on the board.
Alan is the Associate Director of Growth at Firefish. An agency recruiter in a former life, he loves helping recruiters find ways to recruit smarter.