Contingency vs Retained Recruiting: Which Is Right for Your SaaS Startup?

If you have never worked with a recruiting agency before, the fee structure conversation can feel confusing, and agencies do not always make it easy to understand. Here is a plain-English breakdown of both models and exactly when each one makes sense for an early-stage SaaS company.

What is contingency recruiting?

In a contingency arrangement, you pay the recruiting agency nothing unless they successfully place a candidate. The fee, typically 18 to 25 percent of the candidate's first-year base salary, is only charged when someone accepts the offer and starts the job.

There is no exclusivity required. You can work with multiple recruiting agencies simultaneously and run your own job postings in parallel. If no one is placed, you owe nothing.

What is retained search?

In a retained search, you pay an engagement fee upfront, typically one-third of the projected total fee, at the start of the search. A second installment is due when the recruiter delivers a shortlist of finalists. The final balance is paid when a candidate accepts the offer and starts.

In exchange for the upfront commitment, the recruiter dedicates exclusive, prioritized attention to your search. Your role is not competing with 30 other open searches on their desk. Retained arrangements also typically come with a replacement guarantee, if the hire does not work out within a defined period, the recruiter re-searches at no additional cost.

The fee math

Both models are priced similarly as a percentage of base salary, but they feel very different:

• Contingency: $90K base AE hire at 20% = $18,000, due only at start date
• Retained: Same hire, $6,000 at kickoff, $6,000 at shortlist, $6,000 at start
• VP Sales at $175K base, retained at 25%: $14,500 upfront, $14,500 at shortlist, $14,500 at placement

The total fee is often similar. The difference is timing of payment and what you get in exchange.

When contingency makes sense

For most SaaS startups hiring their first one to three revenue roles, contingency is the right starting point. You are taking on no financial risk, if the recruiter does not deliver, you owe nothing. You can run multiple recruiters simultaneously to increase the surface area of the search.

Contingency works well when:

• You are hiring an AE, SDR, CSM, or revenue operations role
• You have four to eight weeks to fill the role
• You want to maintain optionality and run your own job board in parallel
• The candidate pool for the role is reasonably sized

When retained search makes sense

Move to retained when the stakes are high enough that you need guaranteed dedicated attention and a faster turnaround. The economics shift when a wrong hire costs more than the upfront fee, which is almost always true for VP-level and above.

Retained makes sense when:

• You are hiring a VP Sales, CRO, or Head of Marketing
• The search needs to be confidential, you cannot publicly post the role
• You need to move in under 30 days
• The candidate pool is small and passive outreach is the only way to find them
• A bad hire would cost you more than 6 months of momentum

What Beacon Talent offers

We work on both contingency and retained models depending on the role and timeline. For most AE and CSM searches, contingency is the right fit. For VP Sales, CRO, and leadership searches, we typically recommend retained, both because it allows us to dedicate the right bandwidth and because those searches require a level of discretion that contingency does not support well.

If you are not sure which model fits your situation, the honest answer is that we will tell you on the first call, even if contingency means we take on more risk. A good long-term client relationship matters more than the structure of a single search.