Negotiate the base, not just the percentage
Most talent teams push on the headline percentage and stop there. A move from 22 to 20 per cent on a £60,000 salary saves £1,200. Changing the salary base the percentage is applied to often saves more.
Ask for basic salary only, excluding bonus, car allowance, sign-on payments and any guaranteed first-year earnings. On packages with a meaningful variable element, that single change can be worth more than two percentage points.
- Cap the fee in pounds as well as per cent, so senior hires do not scale without limit
- Agree the base as basic salary, pro-rated for part-time hires
- Exclude sign-on and relocation payments from the calculation
- Set a volume rate that steps down after the second and fourth placement
Fix the clauses that quietly cost the most
The rebate schedule decides what a failed hire costs you. A replacement-only clause means a bad placement costs the full fee plus the time of running the process again.
Candidate ownership periods matter just as much. A twelve-month ownership window means someone who applied directly six months later can still trigger a fee. Push for six months, and require the agency to notify you at the point of introduction rather than at the point of offer.
- Rebate: sliding scale over at least twelve weeks, refunded in cash not credit
- Ownership: six months, starting from the date of introduction
- Duplicate introductions: first written introduction wins, evidenced by email
- Payment terms: thirty days, aligned to the end of the rebate window
Reduce how often you need an agency
Every pound of negotiation is capped by the number of roles you send out. The compounding saving is channel mix: the more hires that come through direct applications, employee referrals and your own network, the fewer briefs an agency ever sees.
Track cost per hire by channel for a full quarter. Most teams find their referral and direct channels already cost a fraction of agency hires, but have no coverage on hard roles — which is precisely when a brief gets sent out at 22 per cent.
- Measure spend and time to hire per channel, not as a single blended figure
- Run a standing referral scheme rather than ad-hoc requests on hard roles
- Extend referrals beyond employees so coverage does not depend on headcount
- Reserve agencies for genuinely scarce skills, with a pre-negotiated rate card
What a fixed-fee model changes
Percentage pricing means your cost per hire rises with every pay-rise cycle, and rises fastest on the roles you can least afford to lose. Fixed-fee and low-percentage models break that link.
On Linillo you pay a subscription, a fixed fee per referral received, and around three per cent of salary when a hire completes. On a £60,000 hire that is roughly £1,800 on the hire itself, against £12,000 to £13,200 at a typical agency rate.
Frequently asked questions
- How much can you realistically negotiate off an agency fee?
- Two to four percentage points is typical on volume commitments. Changing the salary base to basic-only, capping the fee in pounds and extending the rebate period usually saves more than the percentage itself.
- Is it legal to avoid recruitment agency fees on a candidate they introduced?
- If the candidate was introduced under your terms of business and within the ownership period, the fee is contractually due. The way to reduce exposure is to shorten ownership periods and require written notification at the point of introduction.
- What is the cheapest way to hire without an agency?
- Referrals. They convert better than any other channel and cost a fraction of a placement fee. The constraint is coverage, which is why extending referrals beyond your own employees matters.