Recruitment Agency Fees Explained for Tech Startups

A recruitment agency charges a tech startup roughly 15% to 25% of first-year base salary on a contingent search, paid only if you hire, and 25% to 35% of first-year compensation on a retained search, paid in three stages. On a US$150K base account executive hire at a SaaS or AI company, that is about US$22,500 to US$37,500 contingent, or US$37,500 to US$52,500 retained. The rate matters less than what it buys: the fee basis (base or total package), the replacement guarantee and whether the agency works your search exclusively. Scalerr has made 561+ GTM placements across 35+ markets at a 21-day average time to place, and the same three checks apply to any agency you shortlist.

Key takeaways

• Contingent fees run 15% to 25% of first-year base salary for most tech and sales hires, with senior roles quoted nearer 20% to 30%. You pay only when someone starts.
• Retained fees run 25% to 35% of projected first-year compensation, usually split into thirds: at engagement, at shortlist and at placement. You pay even if you hire someone else.
• The fee basis can nearly double the invoice. On a 50/50 base-to-commission plan, a fee charged on total package is far larger than one charged on base. Get it in writing.
• A 90-day replacement guarantee is the floor for any quota-carrying hire, and the clock should start on the first day of employment, not on offer acceptance.
• A bad sales hire costs US$200K to US$2M once ramp, lost pipeline and a restart are counted, so a US$10K difference in fee is rarely the real decision.

How much do recruitment agencies charge tech startups?

Published benchmarks from recruitment software vendors and startup guides put contingent fees at 15% to 25% of the candidate's first-year base salary. Specialised technical and senior roles tend to sit at the top of that band, and entry-level roles nearer 10% to 15%. Retained search for director, VP and C-level roles is usually quoted at 25% to 35% of projected first-year compensation. There is no official fee schedule. Most of these numbers come from vendors, so treat them as ranges, not quotes.

The table below shows what those percentages mean in dollars on the roles tech startups hire most often. The salary figures are illustrative bases at venture-backed SaaS and AI companies, and the fees are the published ranges applied to them.

For real pay bands by role and market, see our GTM salary guide. Your fee is only as accurate as the salary it is a percentage of, so brief the agency with a realistic number first.

What is the difference between contingent and retained fees?

Contingent means you pay nothing unless the agency places someone who starts. The agency carries the risk, so it works the searches most likely to close and drops the rest. If you have given the same role to four agencies, each one knows it is competing against three others, and the effort you get reflects that.

Retained means you pay to have the search run, usually one third at engagement, one third when a shortlist is presented and one third at placement. You get exclusivity, a named consultant, a timeline and a shortlist built against a scorecard agreed before sourcing began. You also carry the risk that the search does not close. A good retained firm earns that trust by showing recent searches at your stage and telling you early if the brief or the package is wrong.

A third structure sits between them. Hybrid or engaged search takes a small upfront fee, often 10% to 20% of the total, with a reduced fee on placement. It suits founding AEs and enterprise sellers, where you want focus from the agency but the role is not senior enough to justify full retainer economics.

The rule we use: pay for exclusivity where the downside of a miss is large. A weak SDR costs you a few months. A weak head of sales costs you a year, a team and sometimes a market. Use contingent for volume roles where one miss is cheap, and retained for the hires that shape the next two funding rounds.

What is the fee actually calculated on?

Most agencies calculate the fee on first-year base salary only, excluding bonus, commission and equity. Some calculate it on total first-year cash compensation, including target variable. For a SaaS or AI sales hire, that choice matters more than the headline percentage.

Take an enterprise AE on a US$150K base and US$300K OTE. A 20% fee on base is US$30,000. A 20% fee on OTE is US$60,000. Same rate, same candidate, double the invoice. Sales roles skew this further because the variable portion is large and the agency has no control over whether it is earned.

Ask three questions before you sign. Is the fee on base, OTE or total package? Does it include sign-on bonuses and guaranteed first-year commission? Is it calculated on the offered salary or the accepted one? Vague answers to any of these are an answer in themselves.

What terms matter more than the percentage?

Three terms decide whether the agency shares your risk. The first is the replacement guarantee. Most agreements carry 60 to 90 days. For a quota-carrying hire, 90 days is the floor, because real performance does not show until a full sales cycle has passed. Push for longer on senior roles, and check whether you get a replacement search or a refund.

The second is when the guarantee clock starts. If it runs from offer acceptance, a candidate on a two or three month notice period can leave you before they start. Ask for the clock to run from the first day of employment.

The third is exclusivity and ownership. Find out how long the agency owns a candidate after submitting them. A 12-month ownership clause on a CV you could have found yourself is a hidden fee. For hires outside your home market, such as a US company opening in Asia or the UK, you also want the agency to advise on titles, sequencing and employer-of-record options, not just send CVs. Our guide to tech sales recruitment agencies in the US covers what to expect from a specialist in that market.

Is the cheapest agency the best value?

No, and the maths is simple. Compare cost per successful hire, not rate. A 15% contingent fee on a role that several agencies are chasing buys a pile of CVs and little attention. A 25% retained fee on an exclusive search buys a shortlist of three to five people who match a scorecard you wrote together.

On a US$150K base AE, the gap between 15% and 25% is US$15,000. A bad enterprise AE hire typically costs six to twelve months of salary and benefits, lost pipeline during ramp and the cost of restarting the search. Even at the low end that is well above the fee gap. A better agency does not need to be cheaper. It needs to lower the odds that you pay twice.

There is also a time cost. A founder who spends 10 hours a week filtering CVs from a volume agency is paying in the one resource a seed or Series A company cannot buy back. Scalerr averages 21 days to place, and speed like that comes from a tight scorecard and a network of employed people, not from sending more profiles.

How do you compare agency quotes?

Put every quote into the same format before you decide. For each agency, write down the model, the percentage, the fee basis, the guarantee length and start date, the payment schedule and who will run the search. Then convert the percentage into dollars on the same illustrative salary so the comparison is real.

Ask each agency what share of its placements in the last year were go-to-market roles at tech companies, and which SaaS or AI companies at your stage it has placed recently. A specialist names them quickly. A generalist describes a database. Ask who runs your search and how many other searches they carry at once. Then ask them to describe the ideal profile before you describe it. If the answer is your job description read back to you, they have not done this before.

Finally, negotiate the terms that cost the agency little and protect you a lot: guarantee length, guarantee start date, fee basis and a capped ownership window. Rate cuts on contingent work often reduce the effort you receive, while better terms rarely do.

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