Success-Fee Recruiting for US Tech Companies: How It Works and What It Costs
Success-fee recruiting means a company pays only when a candidate is actually hired. For US tech companies, the most common version is contingency recruiting, where an agency charges 15% to 25% of the new hire’s first-year salary. Newer models include AI recruiters, some of which charge companies a smaller success fee and some of which, like Refer, are free for companies because the candidate pays instead.
This guide explains how each success-fee model works, what it costs on a typical tech hire, what to check in the contract, and how to choose the right model for your stage.
TL;DR
- Success fee = you pay only when someone is hired.
- Contingency agencies charge 15% to 25% of first-year salary; on a $150,000 engineer, about $30,000.
- Retained search charges 25% to 35%, partly up front, and is mostly used for executive roles.
- Some AI recruiters charge companies a smaller success fee; Refer is free for companies.
- Before signing, check the fee basis, payment timing, guarantee and candidate ownership period.
How Does Success-Fee Recruiting Work?
- You share a role with the recruiter or platform.
- They source, screen and present candidates.
- You interview and decide.
- If you hire one of their candidates, you pay the agreed fee, usually once the person starts.
If you don’t hire anyone, you pay nothing. That’s the appeal: the risk sits with the recruiter, not with you.
What Are the Main Success-Fee Models?
| Model | Who pays | Typical fee | Best for |
|---|---|---|---|
| Contingency agency | The company | 15% to 25% of first-year salary (Pin, citing SHRM) | Urgent or niche roles |
| Retained search | The company, partly up front | 25% to 35% of first-year compensation | Executive roles |
| AI recruiter with a company success fee | The company | Lower than agencies, varies by provider | Teams hiring regularly |
| AI recruiter paid by the candidate | The candidate, only if hired | Free for the company | Startups that want no hiring fees |
What Does Each Model Cost on a Typical Tech Hire?
For a software engineer with a $150,000 base salary:
| Model | Cost to the company |
|---|---|
| Contingency agency at 20% | $30,000 |
| Contingency agency at 25% | $37,500 |
| Retained search at 30% | $45,000 or more |
| Refer (Lia) | $0 |
Fees scale with salary, so the more senior the hire, the bigger the invoice. A team making five engineering hires in a year through an agency can spend well over $100,000 on fees alone.
How Do Incentives Differ Between Models?
Who pays shapes how the recruiter behaves.
- Contingency agencies are paid to close quickly, often competing with other agencies for the same role. That can push speed over fit (Dover).
- Retained firms are paid partly up front, so they commit more time, at a higher price.
- Candidate-paid models make the candidate the client: the platform earns only when the candidate is hired into a role they want, which keeps matches focused on mutual fit.
What Should You Check Before Signing a Success-Fee Agreement?
- Fee basis: base salary only, or total compensation including bonus?
- Payment timing: at offer acceptance, at start date, or after a period?
- Guarantee: what happens if the hire leaves in the first months?
- Candidate ownership period: how long you owe a fee if you hire a candidate they introduced, even months later.
- Exclusivity: whether you can work with other recruiters at the same time.
“Before we sign: is the fee calculated on base salary only, when is it due, and how long after an introduction would a hire still count?”
How Can Refer’s Lia Help?
Refer’s AI recruiter, Lia, gives you the results of success-fee recruiting with no fee to your company.
- Free for companies. No contract, subscription or placement fee.
- Candidates who already want to talk. Every introduction is double opt-in.
- Two-sided matching. Lia checks your requirements and what the candidate wants next.
- Connects to your job board or ATS and starts matching right away.
- Proven. Lia has made more than 5,000 introductions.
Refer is paid by candidates, only when they’re hired through one of Lia’s introductions. That keeps Lia focused on introductions both sides actually want. Start hiring with Lia.
Which Model Fits Your Situation?
| Your situation | Best model | Why |
|---|---|---|
| Startup hiring its first engineers | Free AI recruiter | No cost per hire |
| Steady hiring across several roles | Free AI recruiter plus referrals | Fees don’t grow with your team |
| One urgent, niche role | Contingency agency | The fee buys speed and reach |
| Executive search | Retained search | Still the standard for senior roles |
How-To: Choose a Success-Fee Recruiting Model in 6 Steps
- List your roles for the next six months. Estimate salaries for each.
- Calculate agency fees at 20%. Know what you’d spend.
- Separate urgent or niche roles. These may justify an agency.
- Use a free AI recruiter for the rest. Let it bring candidates who already want to talk.
- Read every contract’s fine print. Fee basis, timing, guarantee and ownership period.
- Track hires and cost by source. Review every quarter.
Focused FAQ
What is success-fee recruiting?
A model where a company pays only when a candidate is hired.
How much do success-fee recruiters charge in the US?
Contingency agencies typically charge 15% to 25% of first-year salary; retained search charges 25% to 35%.
Is there success-fee recruiting with no fee for the company?
Yes. Refer is free for companies; the candidate pays a one-time fee only if they’re hired through one of Lia’s introductions.
Is Refer free for companies?
Yes. There’s no contract, subscription or placement fee.
What is a candidate ownership period?
The window after an introduction during which you’d still owe a recruiter’s fee if you hire that candidate.
About the Author
Renata is on the founding team at Refer.