How Much Do Staffing Agencies Charge? (2026)
By TNTSEO United | FIS Recruitment | Last updated: August 2026
Quick take. Employers generally encounter two pricing methods. Temporary and temp-to-hire work is billed as an hourly bill rate, which is the worker's pay rate plus a markup covering employer payroll taxes, workers compensation, unemployment, benefits where applicable, recruiting, and the agency's overhead and margin. Permanent placement is a one-time fee, normally a percentage of first-year base salary. In the models described here, the employer pays and the worker never does. This is the standard arrangement for reputable agencies. We are FIS Recruitment, and most clients see a qualified slate within 24 to 72 hours after intake. We quote per requisition rather than from a rate card, so send us the role, shift, and pay range and we can walk you through the bill-rate inputs and produce a quote for your specific requisition. 800.248.8687.
The two ways employers pay staffing agencies
Temporary and temp-to-hire work is billed hourly: bill rate equals pay rate plus a markup. Direct hire is a one-time placement fee, usually a percentage of the person's first-year base salary. Those are the two models most employers meet.
Two points matter up front. The employer carries the cost in both models, and the worker never does. The American Staffing Association's own client materials describe the placement fee as negotiated between the client and the staffing firm, and reputable agencies do not charge candidates. The number that matters to you is the bill rate, not the markup percentage in isolation. A low markup on a high pay rate can cost more than a higher markup on a realistic one, and a markup percentage tells you nothing until you know what it is a percentage of.
How staffing agency markup works
The markup is not the agency's profit. It is the pool that pays every employment cost the agency carries as the employer of record, and only what is left at the end is margin. The formula is simple: bill rate = pay rate + markup. What sits inside the markup is where the money actually goes.
- Employer FICA. The employer share of Social Security and Medicare is 7.65 percent of wages, made up of 6.2 percent Social Security and 1.45 percent Medicare, per the IRS.
- Federal unemployment tax. FUTA is 6.0 percent on the first $7,000 of each employee's wages, and employers who pay into state unemployment funds generally receive a credit of up to 5.4 percent, which brings the effective rate down to 0.6 percent, per the IRS.
- State unemployment insurance. Claims and employment history influence an experience-rated contribution alongside state-set factors, so there is no single number. That difference reaches your bill rate.
- Workers compensation premium. Workers compensation premiums are priced by class code and state and are materially higher for warehouse and industrial work than for clerical work because the injury risk is different. Pennsylvania Department of Labor and Industry states that coverage is mandatory for employers with one or more employees, part-time or full-time. New York's Workers' Compensation Board states New York employers may be required to carry workers compensation, disability benefits, and Paid Family Leave coverage.
- Benefits and paid leave where the assignment or the jurisdiction requires them.
- Recruiting, screening, onboarding, invoicing, and replacement cost. This covers the work of finding, checking, and standing the person up, plus doing it again if the first placement does not work.
- Overhead and margin. What is left.
A large share of the markup leaves the agency before it becomes profit. The table below shows how much.
Where each dollar of a staffing agency bill rate goes
Illustrative example, not a quote. The figures below are the American Staffing Association's own published worked example from its "Understanding Staffing Profit" fact sheet, dated May 2019. ASA uses a $17.00 national average hourly pay rate, drawn from its Staffing Employee Survey of nearly 12,000 temporary and contract workers, and shows that pay rate marked up by 51.5 percent to a $25.76 bill rate. The component percentages come from ASA's Staffing Operations Benchmarking Survey. Your numbers will differ, because the pay rate is a 2019 national average and the unemployment and workers compensation components vary by state and work type.
| Line item | What it pays for | Who receives it | ASA example on a $17.00 pay rate |
|---|---|---|---|
| Worker's gross pay | The hourly wage for the hours worked | The worker | $17.00 |
| Employer FICA | Employer share of Social Security and Medicare, 7.65 percent | Federal government | $1.30 |
| Federal and state unemployment tax | FUTA at 0.60 percent and SUTA at 4.00 percent in ASA's example, both varying by state | Federal and state governments | $0.78 combined ($0.10 FUTA, $0.68 SUTA) |
| Workers compensation premium | Injury coverage, 1.99 percent in ASA's example, varying by work type and state | The insurance carrier | $0.34 |
| Benefits and paid leave where applicable | Health, paid leave, and other benefits where the assignment or jurisdiction requires them | The worker and benefit providers | Not broken out separately by ASA. Sits inside the general and administrative line below |
| Recruiting, screening, and onboarding | Sourcing, verification, background and drug screening, onboarding, and replacement cost | The agency and its vendors | Not broken out separately by ASA. Sits inside the general and administrative line below |
| Agency overhead and margin | ASA's general and administrative line at 18.70 percent, covering corporate payroll, taxes and benefits, rent, equipment, advertising and marketing, plus net profit at 3.3 percent | The agency | $6.34 combined ($5.49 general and administrative, $0.85 net profit) |
| Total bill rate | What the employer is invoiced per hour worked | Invoiced by the agency | $25.76, a 51.5 percent markup on the pay rate |
Two of those rows are deliberately not filled with numbers. ASA folds benefits, recruiting, and screening into its general and administrative line rather than itemising them, and rather than invent the split to make the table look tidy, we have said so. The dollar example comes from ASA's Staffing Employee Survey, while the general and administrative and net profit percentages come from its separate Staffing Operations Benchmarking Survey, so the percentage and dollar columns are not arithmetic derivatives of each other. The dollar column still sums exactly to the $25.76 bill rate.
The same role bills differently in Allentown and on Long Island for reasons that have nothing to do with the agency. The statutory floors differ: the New York State Department of Labor sets the Long Island minimum wage at $17.00 per hour as of January 1, 2026, while the Pennsylvania Department of Labor and Industry confirms Pennsylvania's remains $7.25. Market pay differs too. Bureau of Labor Statistics data for May 2025 puts the median hourly wage for laborers and freight, stock, and material movers in the Allentown, Bethlehem, Easton metro at $20.38. And workers compensation is priced by class code, so a forklift role and a front desk role in the same building carry different premiums.
Why staffing agency markup rates vary
There is no credible universal markup number, and an agency that offers one without understanding the requisition is guessing. The one figure worth citing is ASA's own worked example above, which uses a 51.5 percent markup on a $17.00 pay rate. That is a published illustration from the industry's trade association, not a market rate, and ASA does not publish it as a benchmark.
Direct hire placement fees
Direct hire is priced as a one-time fee, normally a percentage of the person's first-year base salary, invoiced after the hire starts. FIS's own guide to building a Lehigh Valley talent pipeline puts it plainly: for direct hire, pricing is usually a placement fee tied to the role's compensation. We are not publishing a percentage range here, because no industry body publishes one we could stand behind, and a made-up range would be worse than no range.
What the fee normally includes is search, screening, offer support, and a replacement guarantee window. When you compare two quotes, weigh the guarantee and replacement terms alongside the headline percentage. Ask which you get, in writing. Executive and leadership searches are priced higher and are often structured as retained work with staged payments, because the search itself is a different job.
Conversion and buyout fees on temp-to-hire
An agency recovers its recruiting investment one of two ways: through the hourly markup over time, or through a conversion fee when you hire the person permanently. The American Staffing Association confirms the mechanic on its client FAQ, noting that many staffing firms let you hire a temporary or contract employee permanently and that a placement fee is negotiated to complete the hiring process. Negotiated is the operative word. The written agreement may prorate the fee down as the worker accrues hours, on the logic that the markup has already repaid part of the cost, and may reduce it to zero at a defined threshold.
Four questions settle it before you sign: is there a fee at all, how is it calculated, does it prorate as hours accrue, and at what point does it reach zero? Get the hour count or the date in writing, because that number is the one that changes your math. For how the model itself works, see how temp, temp-to-hire, and direct hire compare in the Lehigh Valley.
How invoice itemization affects Pennsylvania staffing tax
Pennsylvania taxes help supply services, and whether your agency itemises or states qualifying supplied-employee costs in aggregate on the invoice changes how much of that invoice is taxable. Under 61 Pa. Code section 60.4, the taxable purchase price of a help supply service is the service fee, meaning the total charge minus qualifying supplied-employee costs as defined by Pennsylvania law, including salaries, bonuses, commissions, benefits, expense reimbursements, and employer-paid payroll taxes, but only "to the extent that these costs are specifically itemized or that these costs in aggregate are stated in billings from the vendor."
The Pennsylvania Department of Revenue restated this in Sales and Use Tax Bulletin 2025-01, issued March 12, 2025, covering employment agency services, help supply services, and building cleaning services. The bulletin states: "To the extent that these costs are not itemized or stated on the billings, then the service fee shall be the total charge or fee of the vendor or supplying entity." In plain terms, if the agency does not itemise or state qualifying supplied-employee costs in aggregate, the entire invoice becomes the taxable base rather than just the agency's service fee.
The same bulletin closed a workaround. Employers seeking a refund used to submit a letter from the vendor attesting to the employee costs. The Department states it "will no longer accept a letter from a vendor attesting to its nontaxable employee costs," and advises taxpayers to have the vendor issue a revised invoice with the costs itemised or stated in aggregate. Where the service-fee, average-employee-cost, or average-service-fee methods are used, the bulletin also sets out the minimum invoice format: Gross Fee, Less Employee Costs, Taxable Service Fee, PA Sales Tax Rate, PA Sales Tax Due, and Total Invoice Amount. Pennsylvania's sales tax rate is 6 percent, with an additional 1 percent in Allegheny County and 2 percent in Philadelphia, per the Department of Revenue.
The practical instruction is one line: ask any agency for a sample invoice before you sign, and check that qualifying employee costs are itemised or stated in aggregate. This is a plain summary of published guidance, not tax advice. Confirm your own treatment with your accountant.
What raises or lowers a staffing agency quote
Several factors materially affect a quote. A realistic pay rate for the local market matters because an underpriced requisition is slow to fill and a long empty seat costs more than a higher rate would have. Role and skill scarcity matter too: a certified reach truck operator and a general labourer are not the same search. Workers compensation class code and injury risk affect the premium. Industrial work carries a higher premium than clerical work, and it is a real cost, not padding. Committed volume over a known period is cheaper to service than one requisition at a time, and rates usually reflect that. Shift pattern and overtime also matter because nights, weekends, and heavy overtime cost more to fill and more to keep filled. The market's statutory and practical floor matters because you cannot price below what the operation down the road is paying, whatever the state minimum says. A fast interview loop wins candidates you would otherwise lose. Heavier screening requirements add cost, so ask for what you genuinely need rather than everything available. Telling the agency up front that you intend to convert changes how they screen and can materially affect candidate fit.
Questions to ask before signing a staffing agency agreement
- What is my all-in bill rate for this exact role, shift, and location?
- What is the markup percentage, and precisely what does it cover?
- Are qualifying employee costs itemised or stated in aggregate on the invoice?
- Is there a conversion fee, how is it calculated, and does it prorate?
- What is the replacement guarantee, how long does it run, and is it a replacement or a refund?
- What happens to the rate on overtime hours?
- Who carries workers compensation and unemployment, and can I see current certificates?
- What are the payment terms, and what happens if I extend the assignment?
Ask us the same eight questions, and you will get the answers on the first call rather than after a discovery meeting. More on how we work is on our employers page, in building a Lehigh Valley talent pipeline, and in how we staff Lehigh Valley warehouses.
Frequently asked questions about staffing agency fees
How much do staffing agencies charge employers?
Two ways. Temporary and temp-to-hire work is billed as an hourly bill rate, which is the worker's pay rate plus a markup covering employer payroll taxes, workers compensation, unemployment, benefits where applicable, recruiting, and the agency's overhead and margin. Permanent placement is a one-time fee, normally a percentage of first-year base salary. There is no published universal rate, because the number depends on role, shift, volume, workers compensation class code, and local market pay. Ask for the bill rate itself rather than the markup percentage.
What is a staffing agency markup and what does it cover?
The markup is the amount added to the worker's pay rate to produce the bill rate, and most of it is cost rather than profit. It covers the employer share of Social Security and Medicare at 7.65 percent per the IRS. It also covers federal and state unemployment tax, workers compensation premium, benefits and paid leave where applicable, and the agency's recruiting, screening, onboarding, invoicing, and replacement work, with margin as whatever remains. In the American Staffing Association's published example, net profit is 3.3 percent of the bill rate.
What is the difference between pay rate and bill rate?
The pay rate is what the worker earns per hour. The bill rate is what you are invoiced per hour, and it equals the pay rate plus the markup. The gap between them is not agency profit. It funds employer payroll taxes, unemployment contributions, workers compensation premium, any benefits, and the agency's cost of recruiting and replacing. When comparing agencies, compare bill rates for the same role, shift, and location, because a markup percentage means nothing without the pay rate it is applied to.
Do job seekers pay staffing agency fees?
No. In the two pricing models described here, the employer pays and the worker never does. This is the standard arrangement for reputable agencies. On temporary and temp-to-hire assignments the client is invoiced an hourly bill rate, and on direct hire the client pays the placement fee after the person starts. The American Staffing Association describes direct placement contingency fees as paid by the client after the employee is hired. Any arrangement that asks a candidate to pay to be placed should be treated as a warning sign rather than a normal industry practice.
How much is a direct hire placement fee?
It is normally a percentage of the person's first-year base salary, invoiced once the hire starts. No industry body publishes a range we could stand behind, so we are not printing one. What matters more than the percentage is what the fee includes and what happens if the hire does not work out. Compare the replacement guarantee window, whether it is a replacement or a refund, and what search and screening work is covered. Executive searches are priced higher and often structured as retained work.
Is there a fee to hire a temp worker permanently?
A fee often applies, and it is negotiated rather than fixed by any industry rate card. The American Staffing Association notes that many staffing firms let clients hire a temporary or contract employee permanently and that a placement fee is negotiated to complete the hiring process. The written agreement may prorate that fee down as the worker accrues hours, because the hourly markup has already repaid part of the recruiting cost, and may reduce it to zero at a defined threshold. Ask whether a fee applies, how it is calculated, whether it prorates, and when it reaches zero.
Are staffing agency services taxable in Pennsylvania?
Yes. Pennsylvania taxes help supply services, and how the invoice is written decides how much of it is taxable. Under 61 Pa. Code section 60.4, the taxable amount is the service fee, meaning the total charge minus qualifying supplied-employee costs as defined by Pennsylvania law, including salaries, bonuses, commissions, benefits, expense reimbursements, and employer-paid payroll taxes, but only where those costs are itemised or stated in aggregate on the billing. PA Department of Revenue Sales and Use Tax Bulletin 2025-01, issued March 12, 2025, states that where they are neither itemised nor stated in aggregate, the taxable service fee is the total charge. Confirm your own treatment with your accountant.
Get a staffing quote for your role
Send us the role, the shift, and the pay range you can approve, and we can walk you through the bill-rate inputs and produce a quote for your specific requisition. We quote per requisition, so the number you get is for your job, not an average. Open a requisition, call 800.248.8687, or email info@fisrecruitment.com. We staff industrial, office and clerical, and sales and customer service roles across the Lehigh Valley in Allentown, Bethlehem, Easton, and Hazleton. We also staff those roles across Long Island from Islandia and Hauppauge.
