US · Margins
What is a good gross margin for a staffing agency?
Typical staffing gross margin bands by niche, what separates a healthy contract book from a thin one, and why bill-to-pay ratio matters more than headline rate.
The short answer
Healthy US contract staffing gross margins run roughly 18 to 28 percent in light industrial, 22 to 32 percent in healthcare and allied, and 25 to 40 percent in IT and professional. Below 15 percent a temp desk rarely covers its own cost of funding. Executive search and perm are priced as a fee, not a margin.
Gross margin in staffing is bill rate minus the fully burdened pay rate — wages plus employer taxes, workers' compensation, unemployment insurance and any benefits — divided by bill rate. Founders who compute it on the raw wage rather than the burdened cost consistently overstate margin by five to eight points and then wonder where the cash went.
The band you can hold is a function of niche and scarcity, not negotiation skill. High-volume light industrial is priced by procurement and sits low. Clinical, allied and specialist IT roles are scarce enough to hold a wider spread. Vendor-managed and MSP programmes compress everything by several points in exchange for volume.
Judge a desk on gross profit per placement and per consultant, not on percentage alone. A 20 percent margin on a $95 bill rate produces more cash than a 30 percent margin on a $28 one, and cash is what funds the next payroll.
United States
How this differs by US state and metro
The answer above holds nationally. What changes locally is registration, insurance, wage rules and how much cash each contractor consumes — these are the states and metros founders ask us about most.
South Carolina
Charleston · Greenville · Columbia
Manufacturing and port work run high headcount at competitive rates. Volume is achievable quickly, which is precisely why the payroll gap becomes the constraint before the sales pipeline does.
South Carolina guideNew York
New York City · Brooklyn · Long Island
New York bill rates are among the highest in the country, which is good for gross margin and bad for cash: the higher the pay rate, the more each contractor consumes while you wait for the invoice. Factoring or payroll funding is close to standard here.
New York guideTexas
Dallas–Fort Worth · Houston · Austin
Texas is a volume market: light industrial and logistics run high contractor headcount at moderate margins, which makes the working capital requirement large relative to profit. Factoring lines scale with invoices here and are the usual answer.
Texas guideFlorida
Miami · Orlando · Tampa
Florida hospitality and healthcare clients frequently pay on 45 to 60 day terms while the workers are paid weekly. Seasonal peaks mean your largest payroll weeks and your slowest collection weeks can arrive together — size the facility for the peak, not the average.
Florida guideMetro-level wage, bill rate and startup cost detail:
Local questions
Does this change if I start in South Carolina?
The national answer holds. What changes in South Carolina is local: Manufacturing and port work run high headcount at competitive rates. Volume is achievable quickly, which is precisely why the payroll gap becomes the constraint before the sales pipeline does. Check the South Carolina page before you register anything, and model the cash gap on South Carolina pay rates rather than national averages.
Is the answer different in New York than in South Carolina?
The economics are the same shape; the local detail is not. In New York: New York bill rates are among the highest in the country, which is good for gross margin and bad for cash: the higher the pay rate, the more each contractor consumes while you wait for the invoice. Factoring or payroll funding is close to standard here. That affects your registration checklist and your working capital number, not the underlying principle.
Which US cities does this apply to?
All of them — but we publish metro-level bill rate, wage and startup cost detail for Miami, Orlando, Tampa, Jacksonville and more, because pay rates and buyer mix vary far more between metros than between states.
Do I need a separate licence in every state I place in?
You register where you have employees and where you do business, not once nationally. Most states require unemployment insurance and withholding registration plus workers' compensation cover; a minority licence employment agencies, and some cities — New York City among them — licence separately from the state. Confirm each state and city before your first placement there.
Go deeper
Staffing agency funding: how US agencies fund payroll and growth
How US staffing agencies fund contractor payroll and growth: invoice factoring, payroll funding, asset-based lending, bank lines and equity — what each costs, what it requires and when each one fits.
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