Charging referral fee to agent

[Another Dodgy Agent]

Wow, 20%. You guys must be minted.

Yep, but evidently we're not allowed to mention it on here, cos it upsets the sensitive souls, so no we're all skint and setting up a recruitment agency tent city as I type!

[Another Dodgy Agent]

Has anyone ever charged a referral fee to an agent?

Got an approach for a 75k permie job. Not interested but got a few mates who might be.

No idea what the agent would charge for a finders fee - 10k+. So I'm thinking of suggesting a 2k fee for introducing someone who is interested, and uniquely qualified in a niche field, in the job.

How would you nail that down legally? Get it in writing? Get a contract drawn up?

Anyone done this before?

We normally pay £500 for referral, which you would then invoice to us as "referral fee" including the VAT amount. All perfectly legit and above board.

You could always suggest more, I suspect it will depend how niche the skillset is.

[expat]

We normally pay £500 for referral, which you would then invoice to us as "referral fee" including the VAT amount. All perfectly legit and above board.

You could always suggest more, I suspect it will depend how niche the skillset is.

Is that also what you would pay to another agent (if you'll pardon the expression) if you had to use them to find the body for you?

[DodgyAgent]

Wow, 20%. You guys must be minted.

We are when the placement sticks.

The average billings expectancy for an average recruitment consultant in IT are about £150,000.

Basic salary of say £25k plus cost of resourcer leaves a "profit" of £100,000 . Commission on top probably accounts for a further £20k leaving the company with £80k of profit on each "successful" recruitment con.

That means the recruitment con has to Bill £12k per month, so one £75k @ 20% is £15k which is a nice little earner.
As ever for every one you place nine others either fall by the wayside or take a job elsewhere.

[Another Dodgy Agent]

Is that also what you would pay to another agent (if you'll pardon the expression) if you had to use them to find the body for you?

I can see where this is going, but will answer honestly. Normally if you used another agent then you would split the total agreed margin squarely down the middle so for example if the client sets a margin of 15% then the other agent gets 7.5% of that. We only do splits with agents we have known for a long time that are not direct competitors, so for example if I get a financial role in that is not closely related to IT i.e. Fund Accounting Analyst then I ship the role over to a "friendly" financial firm, likewise when they get IT roles in they send them our way.

[expat]

I can see where this is going, but will answer honestly. Normally if you used another agent then you would split the total agreed margin squarely down the middle so for example if the client sets a margin of 15% then the other agent gets 7.5% of that. We only do splits with agents we have known for a long time that are not direct competitors, so for example if I get a financial role in that is not closely related to IT i.e. Fund Accounting Analyst then I ship the role over to a "friendly" financial firm, likewise when they get IT roles in they send them our way.

I ask because I have once or twice got a contract and then realised that the agency that knows me and placed me, is not the agency that got the contract: one subcontracts to the other. Fair enough, everybody gains. But it's pretty clear that "my" agency is getting a damn sight more than £500 once-off for finding me: so why should I do the same for that sum?

Except because, as with references/leads, contractors are usually gullible and don't realise the commecial value of what they have? I.e. offer them just £500 instead of 7.5% because you can.

[DodgyAgent]

Is that also what you would pay to another agent (if you'll pardon the expression) if you had to use them to find the body for you?

I have never ever done a split with another agency

[ratewhore]

Last time I tried this the agent refused a referral fee or a split margin. I did get offered a £100 voucher though.

So I ran two guys through my books to them instead and made over £35K profit...

[DieScum]

35k. I salute your business acumen.

It is interesting how valuable a good contacts book is - just have to know when and how to monetise it.

[Scotchpie]

I referred someone once and got a £25 gift voucher for M+S