As a recruiter, filling job orders for clients is your bread and butter. A full pipeline is a sign that your recruiting business is healthy. But as the business grows, so should your profits. Depending on how long you’ve been in the industry, it might be time to raise your recruiter fees.
Charging a higher rate can come with a price if done arbitrarily. Raise fees without a strategy, and clients might end up switching to your competitors. You need a solid approach to charging more for your services. Follow these tips to raise your recruiter fees without losing your best clients.
1. Justify Your Higher Fee With Value
Chances are, you’re not willing to drop cash on something that lacks quality. Likewise, a client wants to know they are getting their money’s worth when you raise fees. Justifying the higher recruiting fee with the value of your services can lessen the blow of the new rate.
The longer you’ve been in the business, the more you are able to charge. The recruiting industry knowledge and connections you offer add value to your services. Raising your rates is easier if you have a history with a client. Since the client has already worked with you, they know the value of your services and may be willing to pay more.
To justify your fee, you need to provide exceptional talent to clients. If you frequently place less-than-stellar candidates, you can’t charge higher fees. To charge more than your competitors, you need to provide a higher quality service.
To add value to your recruiting business, offer services beyond sourcing talent and placing candidates. Exceed your clients’ expectations by offering advice and information as a hiring consultant.
For example, you could provide helpful blog articles that explain hiring techniques. Or, spend time giving your clients one-on-one recommendations and answering their individual questions. Not every recruiter offers these perks, giving you a leg up on the competition.
2. Have Good Cash Flow Before Raising Rates
Before you raise fees, make sure your finances can handle the change if some of your clients aren’t on board. Take a hard look at your cash flow before asking for a higher rate. Make sure you consider all your recruiter business’s expenses. Evaluate the possible outcomes of adjusting your rates. A financial advisor can help you figure out cash flow projections after raising your fees.
When negotiating prices, whoever needs it the least will win. Put yourself on the winning side of the deal by creating a cash flow cushion. The cushion acts as a safety net and protects you from negative changes in your money.
When you quote a higher rate to a client, there’s always a chance they will switch to another recruiter. If you need immediate cash, you may not want to raise rates. You can’t walk away from a client because of a fee negotiation if your funds are low. Instead, wait until your cash flow is strong enough to handle changes in income.
3. Have a Full Client Pipeline
The number of recruiting opportunities you have coming in plays a part in raising rates. If you don’t have many searches coming in, it’s not an ideal time to charge more. Higher fees might cause some clients to use a competitor’s service. Consider increasing fees for future job orders after getting a significant number of searches lined up.
With a full client pipeline, you gain leeway to adjust pricing. Even if several regular clients drop you due to the increase, the higher fees make up the lost income. You can afford to lower the volume of placements by charging a higher fee.
4. Believe That You Are Worth The Increase
Vince Lombardi, former NFL coach that led the Green Bay Packers to five championships, said: “Confidence is contagious. So is lack of confidence.”
The same holds true for a recruiter justifying higher fees. If you aren’t 100% committed to the increase, don’t suggest it to your clients. You need to believe that you are worth what you charge or no one else will. Once you accept your worth, your clients will too.Identify both the perceived and real value of your services. Know what it costs to provide your services and what your clients are willing to pay. Then, sell your value on a personal and emotional level. Connect with clients by communicating an authentic, natural presentation of your offerings.
Justifying the higher fees becomes easier when you have an edge on your competitors. If you offer the same kinds of candidates as other recruiters, you can’t sell at a steeper rate. But by offering unique and valuable services, you can convince clients to pay more.
What does your recruiting business provide that stands out from the crowd? Answer this, and your worth will be clear.
Amanda Cameron is a content writer at the Patriot Software Company, which is the parent company of Top Echelon, LLC and Patriot Software, LLC. Top Echelon offers recruiting software with both an applicant tracking system and CRM to help recruiters make more job placements. Patriot Software provides affordable online accounting and payroll software for small businesses.