As we enter the second quarter of 2023, the recruitment industry is facing new challenges that are putting pressure on pricing strategies. Whilst last year 90% of agency owners predicted an uplift in revenue, in 2023 this number had dropped to only 70% - and in the first quarter, we’ve seen some indications of the marketing softening a little with permanent recruitment. Most agency owners might be tempted to lower their fees in these times – but we’re here to help you find a better solution!
With the cost of living and wages continuing to rise, it’s important to hold your ground and ensure you get paid a fair rate for your services. So, we thought we would put together some of the top industry tips to help you rethink and adjust your pricing tactics instead of just instantly reducing your fees!
Break down your services
This won’t surprise anybody, but breaking down services into components is a powerful pricing strategy that can help your agency stay competitive in a tough market. With over 88% of recruitment clients valuing the quality of hire over anything else, you can adapt your pricing model by showcasing the value of each individual component and how it influences the quality, instead of offering just one, big package. This way, you’re not only making sure your services’ value is clearly stated but also becoming more flexible with your pricing – which then makes the client more inclined to sign, as they have more control over what they’re paying for.
Some of the most common recruitment services that can be broken down into components include:
- job posting
- candidate search and attraction
- candidate screening and shortlisting
- interview coordination
- salary negotiation
Each of these requires a different level of expertise, time commitment, and resources – so when determining the pricing for each component, you can consider each of those and price the service accordingly. For instance, if your recruitment agency specializes in niche roles, they might charge more for candidate screening because it requires more specialized knowledge and experience.
Another great thing to introduce is a pay-as-you-go system for your services – so your clients can mix and match the components depending on their needs and your quality of service. This not only makes them keener on using your agency but also builds trust and shows confidence in your recruiters’ skills.
Package them up!
After you know exactly what different components your services consist of, you can get to creating packages. By doing so, you can offer clients a range of options that fit their needs and budget – and providing a small discount when someone purchases an entire package is a great way of convincing clients to go for a few of the components, instead of choosing just one to start with (which overall means more money for your agency!).
Some common recruitment packages may include basic, standard, and premium options. A basic package could include job posting and candidate screening, while a standard package may offer those services plus interview coordination and reference checking. A premium one will then include all of the above plus additional features such as market analysis and salary benchmarking.
One of the main advantages for clients of this pricing strategy is convenience. Clients can choose a package that fits their needs and budget, without having to spend time negotiating individual services. Additionally, clients may be able to save money by choosing a package that includes multiple services at a discounted rate.
Make sure, however, that you ask the client to pay upfront – for example, after you’ve provided 3 of 6 services included in a package, they pay a certain amount since you’ve already shown the value of your services.
Don’t shy away from temp
If your client is hesitant to take on a permanent role, the best thing you can do is fill the position with a temp-to-perm candidate or a short-term contractor – at least until the market stabilises a bit. The main trend this year is shifting more towards temp recruitment with 37% of agency owners planning to increase temp roles The =softening of the market that we’re facing can make it harder to find perm roles to fill – however, having a well-organised temp desk can help you fill the revenue gaps. One of the biggest advantages of this model is the chance to build long-lasting relationships – after proving to your client that you can provide high-quality service, they’re more inclined to sign with you on a perm basis rather than go looking for a completely new agency they’ve not worked with before!
Don't be afraid to walk away
A tougher market may make you feel like you need every single piece of business you can get - but the ability to walk away from clients is now more important than ever. If a client doesn't agree to your pricing changes, has a problem with your conditions, or simply doesn't work well with your agency, don't be afraid to drop them. After all, this is the type of business you don't want in the first place - so recognising your differences and leaving is the best thing you can do, even if it feels scary in current times. It projects confidence, which will make you stand out from your competitors and paint you as the one steady agency not affected by the storm of the changing market.
To learn more about adjusting to the changing market and making sure your agency is safe, read our eBook below!
Wendy McDougall is Chief Fish of Firefish Software. In her spare time, you'll find her playing squash or feeding her inner geek with the latest technology!