Retained vs. Contingency Recruiting (and Where Flat-Rate Fits In)

There are three common ways recruiters charge for their work - and if you're a commercial contractor evaluating recruiting partners, understanding the differences is the first step to not overpaying. Each model has a specific use case. And each has a specific set of contractors it works well for (and a specific set it doesn't).

Below is a plain-English breakdown of contingency, retained, and flat-rate - and where each one actually fits.

Contingency recruiting

Contingency is the most common model in commercial trades recruiting. You engage a recruiting firm, they source and screen candidates, and you pay a fee only if you actually hire one of their candidates. The fee is a percentage of the placed candidate's first-year salary - typically 20 to 30 percent, sometimes higher for hard-to-fill roles.

The upside: no hire, no fee. Low commitment upfront.

The downside: the fee scales with the salary of the person you hire, which means senior hires cost you more. And because the firm only gets paid when you hire, they have every incentive to push candidates through - right for you or not.

Contingency works best for one-off, transactional hires - a single mid-level role at a small firm, an occasional replacement, or a specialty role outside your recruiting partner's core coverage.

Retained recruiting

Retained is the traditional executive-search model. You pay a percentage of the target salary upfront - typically in three stages (a third to start, a third at shortlist, a third at placement) - whether or not a hire eventually gets made. The firm gives you exclusive commitment to the search: they work on your role, and only your role, until it's filled.

The upside: exclusive commitment, deep search, high-quality shortlists on critical roles.

The downside: expensive. You're paying up front, with no guarantee of a hire, and the total cost can exceed 30-35 percent of the target salary before it's all done. And the model doesn't match how commercial contractors actually hire - one big commitment for one specific role at a time, not the steady flow of hires most GCs and specialty contractors need.

Retained works best for C-suite, VP-level, or highly specialized executive searches at larger firms. For most day-to-day trades hiring - even senior PM or superintendent roles - it's overkill.

Flat-rate recruiting

Flat-rate is the newer model, and the one we built My Trade Talent around. Instead of a percentage of salary, you pay a fixed fee - typically a monthly retainer that covers a defined amount of pipeline activity across your open roles. The fee doesn't change based on how much the hire is paid.

The upside: predictable cost, no penalty for hiring senior people, ongoing pipeline built between hires (not just started fresh each time), and an incentive structure that doesn't reward pushing candidates.

The downside: if you're making only one or two hires a year, the retainer math doesn't work in your favor. A small firm hiring one PM every 18 months is better off with contingency.

Flat-rate works best for commercial contractors making 4-plus senior hires per year - which describes most mid-market and larger commercial GCs, mechanical contractors, electrical contractors, and specialty trades firms across the country.

Side-by-side comparison

The three models compared on the six dimensions that matter most for commercial contractors:

When you pay

• Contingency: on hire only
• Retained: in stages, regardless of outcome (typically thirds)
• Flat-rate: monthly (or per-hire flat fee)

Cost basis

• Contingency: percentage of first-year salary
• Retained: percentage of target salary
• Flat-rate: fixed monthly fee (or fixed per-hire fee)

Cost of hiring senior people

• Contingency: HIGHER - fee scales with salary
• Retained: HIGHER - same problem, worse upfront
• Flat-rate: SAME as junior - fee is flat

Pipeline built in advance

• Contingency: NO - every search starts from zero
• Retained: NO - engagement starts when the role opens
• Flat-rate: YES - pipeline is maintained continuously between hires

Incentive alignment

• Contingency: recruiter is paid to fill the seat - push a candidate whether right or not
• Retained: recruiter is paid regardless of hire - usually well-aligned
• Flat-rate: recruiter is paid regardless of hire - well-aligned

Best fit

• Contingency: 1-2 hires per year, small firms, one-off replacements
• Retained: C-suite, VP-level, executive search at larger firms
• Flat-rate: 4+ senior hires per year, mid-market and larger commercial trades firms

How to pick between the three

The math on which model saves your firm money depends on three things: how many hires you make in a typical year, how senior those hires are, and how much of your growth depends on hiring speed.

If you're hiring one or two people a year and it's not an urgent constraint, contingency is fine. If you're hiring one strategic C-suite person and want a dedicated search, retained might be worth the premium. If you're a mid-market commercial contractor making 4-plus senior hires per year and losing money every week a seat sits open, flat-rate almost always wins the annual cost comparison - and gets you a better pipeline in the process.

The bottom line

There's no single right answer - the right recruiting fee model depends on your hiring volume, your seniority mix, and how much a slow hire actually costs you. But for most commercial trades contractors we work with, flat-rate is dramatically cheaper across a year of hiring than either contingency or retained.

If you'd like the specific side-by-side cost comparison for your firm's hiring pattern, that's a conversation we'd welcome having.