Glossary · Commercials
What is Permanent fee
Also called: placement fee, perm fee.
Definition
A one-off fee for a permanent hire, usually 15% to 25% of first-year salary, billed on start date and subject to a rebate period.
Applies to: US and UK · Reviewed by James Doyle
In practice
Perm revenue is high margin and immediate, but it is lumpy and does not compound. Contract revenue is lower margin per hour and compounds every week the contractor works.
Most durable agencies use perm to fund the working capital that contract consumes in year one, then rebalance as the contract book matures.
Related terms
Rebate period
The window after a permanent placement in which you refund part of the fee if the hire leaves, commonly tapering over eight to twelve weeks.
ReadGross margin
The share of the bill rate left after paying the contractor and their employment burden. It is the money the agency actually runs on.
ReadWorking capital
The cash an agency must hold to pay contractors before clients pay invoices. It is the real startup cost of a contract staffing business.
Read
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