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We’ve already discussed the challenges that arise when the client dictates the bill rate. But what about the opposite extreme when the client sets NO limit on the bill rate?

This can be just as frustrating because you have no idea what they consider reasonable. If you keep your income low and provide them a lower bill rate than they expect, they’ll be happy, but you’ll be cheating yourself. Select a rate too high and you could end up losing the deal and damaging your reputation.

Training CenterSo what’s a recruiter to do? The best strategy is to get them to at least provide a range of bill rates. That way they can’t say that the rate you come up with is unreasonable.

If that fails, here are some strategies that have worked for other contract recruiters:

Base the rate on your target income – Decide how much you want to make and then negotiate the contractor’s pay rate to determine the bill rate. If you are using FoxHire as your back-office, you can call us, and we will run a quote based on those numbers.

Use a multiplier – Multipliers usually range between 1.5 and 1.8, but they can go much higher for healthcare professionals and hard-to-find positions. Simply select a multiplier and take it times the contractor’s pay rate to determine the bill rate.

Set your rate low in hopes of a conversion fee – If you think a placement has the potential to go direct, you can negotiate a low income for yourself and add a Conversion Fee Agreement so that you can get a big payout if/when the employee is hired permanently.

Negotiate higher rates for short contracts – Since it takes more effort to find candidates for short assignments (3-4 months), you can justify higher bill rates for those placements. If the client balks, you can give them the option of lengthening the contract in exchange for a lower bill rate.

Charge based on a direct placement fee – Sometimes the client is hiring a contractor because they don’t have the budget for a direct hire. In this case, you can determine what you would normally earn on a direct hire and divide it by the length of the contract. For example, if the contract is 6 months and you would earn $10,000 by placing the candidate direct, divide that by 1,000 hours (the approximate number of hours a full-time contractor would work in six months). You would need to earn $10 per hour to earn the entire fee in six months. You can call FoxHire for a quote that will give you the bill rate that corresponds to this amount.

There is no “right way” to pick the bill rate. The main thing is to be innovative and not give up until you find a structure that makes both you and the client happy.

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