How Much Do Staffing Agencies Charge for Temporary Staffing?

Staffing agencies are the ideal solution when you require staff on a short-term basis in a hurry. Yet, how much do they cost? And what are you paying for?

Most businesses find it confusing to receive a bill from a staffing agency with multiple charges, markups, and fees that may not all add up. This guide explains what staffing companies bill and why.

How Staffing Agency Pricing Works

Staffing agencies use a simple formula for temporary workers. They take the worker’s hourly wage and add their markup on top. This markup covers their costs and profit.

Here’s the basic math:

• Worker gets paid $20 per hour
• The agency adds a 40% markup ($8)
• You pay $28 per hour total

The worker sees $20, and the agency keeps $8. That $8 covers a lot more than you might think.

What Goes Into the Bill Rate

Recruiting costs can add up quickly. Staffing agencies spend money on applicant tracking systems (recruiting software), recruitment advertisements, background checks, drug screens, and interviews.

Administrative costs include payroll processing, invoicing, compliance, and customer service. They also have insurance and bonding to safeguard you and the agency from liability. 

Office overheads include rent, utilities, software, and employee salaries. 

After covering all these costs, agencies aim for a 3-8% profit margin on temporary staffing. The rest goes to actual expenses.

Typical Markup Ranges

Staffing agency markups differ substantially depending on several factors:

• Administrative positions carry a 25-50% markup. These are relatively less risky and simple to fill.
• Light industrial work typically involves 35-60% markups. Warehouse work, manufacturing work, and the like are included in this category.
• With skilled trades, 40-75% markups are likely. Electricians, plumbers, and specialist technicians charge higher markups because of scarcity.
• Professional services have a markup of 50-100% or even more. Specialists in IT contractors, accountants, or engineers are harder to find.
• Healthcare professionals will have high liability and credentialing, and healthcare staffing will have high markups, sometimes even more than 100%.

The more specialized or rarer a skill, the more it is priced. The best way to find out rates is to reach out to a hiring agency and discuss your hiring needs. 

Factors That Affect Costs

Several things influence how much agencies charge:

• The location has a significant role to play. Cities with tight labor markets see a higher markup than rural areas with limited available labor.
• Assignment length influences costs. Short assignments (less than two weeks) cost more since agencies cannot amortize recruiting costs over many hours.
• Volume discounts are typical. You receive better terms if you use more than 10 temporary workers than a person who needs someone on an as-needed basis.
• Rush orders are extra. Need someone tomorrow? Be prepared to pay 10-25% extra for rush service to account for manpower and other recruiting costs to accommodate your needs. 
• Special skills attract high remuneration. Common skills are less expensive than uncommon knowledge.
• The risk level affects the markup. Handling safety issues, handling cash, or having access to confidential information is more expensive because of the need for added screening.

Hidden Fees to Watch For

Agencies sometimes include additional charges for scenarios. It is important to read the contract and discuss terms before beginning your search:

• Minimum billing is where you are charged a minimum of 4-8 hours, even when the worker has only done 2 hours.
• Administrative charges can be extra line charges over and above the markup.
• Overtime premium is sometimes higher than normal overtime compensation.
• Holiday pay may be charged even if your business does not routinely provide holiday time off.
• There are cancellation charges when you cancel assignments at short notice.
• If you hire a temp worker full-time, you must pay a conversion fee, which may be $500 or possibly thousands.

Ask about all possible fees in advance. Reputable agencies have a clear explanation of fees.

Why the Cost is Worth It

The time saving is enormous. It can take weeks or months of internal time to find, screen, and recruit temporary employees for a job. Agencies do this for you and some can hire a temp worker within a week. 

Risk minimization is crucial. Agencies act as administrators of compliance and verify worker qualifications. This protects your business from liability.

Payroll processing eliminates administrative burdens. The agencies manage taxes, workers’ compensation, and compliance with employment law.

Flexibility enables you to scale up or down as quickly as possible without the hassle of hiring and firing employees.

Cost predictability helps with budgeting. You know exactly how much each hour of temporary labor will cost.

Making Your Decision

Staffing agencies usually charge a 25-100% markup on temporary workers’ pay. It is an investment but covers high expenses and good services.

When choosing an agency, consider its overall cost structure. Compare its markups, fees, services offered and the caliber of candidates it presents.

The cheapest option is not always a good value. A little extra markup can be a reasonable trade-off for better-quality employees, more rapid service, or improved support.

Consider your particular requirements. Large-quantity, extended-duration temporary staffing might be negotiable on a rate basis. Premium rates for good service can justify periodic crisis staffing.

Remember that quality temporary workers can make a big difference in your company. The price of a bad hire is frequently greater than the savings of selecting the lowest-cost staffing agency.

We’re Here to Help

Are you ready to hire a temporary staffing agency for your business? Hunter Recruiting specializes in pairing businesses with skilled temporary and permanent employees from various industries including STEM, healthcare, and more. 

Our competitive prices and customized approach enable you to receive the team you need without the hassle. Contact us today to discuss your staffing needs and receive a customized quote to meet your budget and needs.