Temp markup vs direct-hire fee calculator
A temp worker costs the hourly pay rate plus the staffing firm's markup for every hour they work. A direct hire through a recruiter costs a one-time fee, set in your agreement as a share of first-year salary, and after that you pay their wages and payroll costs yourself.
Enter both sets of terms and the number of weeks you need someone. The calculator compares the totals and shows the week when hiring direct becomes the cheaper option.
Your comparison
Hiring direct costs less from
Week 26
Over 20 weeks, the temp comes out $1,920 cheaper.
- Temp worker, 20 weeks
- $22,400
- Direct hire, 20 weeks
- $24,320
- Temp bill rate$20.00 × (1 + 40%)
- $28.00/hr
- Temp cost per week$28.00 × 40 hrs
- $1,120
- Markup paid over the period
- $6,400
- One-time direct-hire fee20% × $41,600
- $8,320
- Direct employee cost per week$41,600 ÷ 52 × (1 + 0%)
- $800
Conversion fees, overtime and guarantee terms are not included.
Estimates for planning only, based on the numbers you entered.
How this is calculated
Every figure comes from the numbers you enter. Nothing is filled in from averages or outside data.
- Temp bill rate
hourly pay rate × (1 + markup %)- Temp cost
bill rate × hours per week × weeks- Direct-hire fee
annual salary × fee %- Direct employee cost per week
annual salary ÷ 52 × (1 + payroll costs %)- Direct hire cost
direct-hire fee + direct employee cost per week × weeks- Break-even week
direct-hire fee ÷ (temp cost per week − direct employee cost per week), rounded upIf the temp costs the same as a direct employee per week, or less, there is no break-even week.
Payroll costs change the answer. The staffing firm is the temp's employer, so it pays their payroll taxes and insurance out of the markup. On a direct employee you pay those yourself. Leaving payroll costs at 0 makes hiring direct look cheaper than it is.
The calculator leaves out conversion fees if you later hire the temp, overtime, and any guarantee or replacement terms in a recruiter's agreement.
Choosing between temp and direct hire
Use a temp when the end date is real
A seasonal peak, a project with a finish date or cover for someone on leave suits temp staffing. You pay more per hour, and the assignment ends when the work does. Our seasonal hiring plan walks through the timing.
Hire direct when the job will outlast the break-even week
Past that week, the markup keeps costing you every week the temp stays. A permanent employee also keeps what they learn about your site, your customers and your way of working.
Ask about conversion before the temp starts
If you might keep a temp on, ask the staffing firm whether a conversion fee applies and whether it changes after a set number of hours worked.
Know what the fee covers
Ask a recruiter when the fee is due and what happens if the hire leaves early. Our guide to how contingency recruitment works covers the questions to ask before you sign.
Want help filling the role?
Send us the role, the location and the pay range. You pay a recruitment fee only when a successful candidate is hired, subject to agreed terms.
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