Calculate How To Price Your Staffing Services (2024)

FAQs

How do you value a staffing company? ›

Most staffing agencies sell for a rate that is a 3.5-5.5 times multiple of annual earnings, based on their adjusted EBITDA. The exact multiple will vary based on factors that influence the staffing agency's perceived value and attractiveness, like its profit margin and contract lengths.

A staffing agency markup rate is a percentage added to the pay rate for each position filled by a staffing firm. For example, if a staffing company fills a $35 per hour position for a client while charging the client $42 per hour, the markup rate would be 20%.

Gross Margin: $1.12 per hour

While there may be a lower margin per worker, you're able to recoup expenses based on the head count. Otherwise, it is generally advised to stay in the 45 – 75% range to reach a typical revenue and net profit goal for a staffing agency.

According to data from the Society for Human Resource Management (SHRM), the average cost per hire is nearly $4,700. However, various factors could affect the cost, including your business's size, location and industry, as well as the specific role you must fill.

A typical markup rate in California can be anywhere from 35% to 75% markup. Depending on what additional services you may need and their worker's compensation costs. Each employment agency bears different costs and it is hard to compare the two to each other since there are many different variables.

Staffing agencies usually make an average margin of 25% – 100% of an employee's salary or charge a flat fee of $15k per employee.

80% of staffing agencies sell for a 3.5 – 5.5 X multiple of their earnings (adjusted EBITDA).

Fill rate is the ratio of job orders received to job orders filled. When the fill rate begins to decline, it should be taken as a warning sign, says an expert at Talent Plus Staffing, a company that takes pride in their 85% fill ratio, as compared to the industry average of 46%.

Calculating cost per hire involves summing all internal and external recruitment expenses and dividing by the total number of hires in a given period. This metric is crucial for understanding the efficiency of hiring processes and informing budgeting decisions.

Simply take the sales price minus the unit cost, and divide that number by the unit cost. Then, multiply by 100 to determine the markup percentage. For example, if your product costs $50 to make and the selling price is $75, then the markup percentage would be 50%: ( $75 – $50) / $50 = . 50 x 100 = 50%.

What's a reasonable profit margin? ›

As a rule of thumb, 5% is a low margin, 10% is a healthy margin, and 20% is a high margin.

Generally speaking, starting a staffing business can be a profitable venture, especially in California where the demand for staffing services is high. According to industry data, the average profit margin for a staffing firm in the U.S. is around 10% to 12%.

Staffing agencies typically charge clients a percentage on top of the employee's hourly wage. This average markup rate is around 25% but can vary depending on the position type and the required level of experience. The typical range of markup rates is between 15% and 40%.

Salary negotiation with staffing agencies can be tricky, especially if you are not familiar with the market rates, the agency's policies, and the client's expectations. You want to get paid fairly for your skills and experience, but you also don't want to lose out on a good opportunity or damage your reputation.