Contingency recruiting means you pay only when a candidate is placed, typically 18–25% of first-year base salary depending on the role, with no risk if there's no hire. Retained means you pay an upfront fee to engage the firm, regardless of outcome. For most early-stage SaaS companies, contingency is the right starting point.
See the fee breakdownIf 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.
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. According to SHRM, the average cost-per-hire across all methods is roughly $4,700, but specialized roles often cost several times that amount.
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.
How it works: No upfront cost. Fee paid only on successful placement, typically 18–25% of first-year base salary depending on the role.
Best for: AE, SDR, CSM, and mid-level roles. Searches where you have 4–8 weeks and want optionality.
Trade-off: Recruiter is working multiple searches simultaneously. Your role competes for their attention.
How it works: Upfront engagement fee (typically one-third of total), second payment at shortlist, balance at placement.
Best for: VP Sales, CRO, Head of Marketing. Searches where confidentiality, speed, or stakes are high.
Trade-off: Upfront cost regardless of outcome. But recruiter dedicates exclusive bandwidth to your 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.
Both models are priced similarly as a percentage of base salary, but they feel very different:
20% fee = $18,000, due only at start date.
$6,000 at kickoff, $6,000 at shortlist, $6,000 at start.
25% fee: $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.
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.
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.
The honest take: For most SaaS startups hiring their first one to three revenue roles, contingency is the right starting point. It de-risks the relationship, if the recruiter does not deliver, you owe nothing. Move to retained when the stakes are high enough that you want to lock in full attention and a faster turnaround.
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.
Book a free 15-minute call. We will tell you honestly, contingency, retained, or whether you even need a recruiter yet. No commitment, no pressure, and Beacon places GTM talent at SaaS companies in 3 weeks.
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