💸 Fixed-Fee vs. Commission Recruiters: What Startups Really Need to Know
(Before You Wire 25 % of Salary to Someone Who’s Never Used Slack)
Searching “recruiting agency pricing” turns up a jungle of percentages, retainers, and fine print. For cash-strapped startups, every euro that isn’t going into product or runway matters. So let’s cut through the gobbledygook:
| Model | Typical Cost | When You Pay | Hidden Gotchas |
|---|---|---|---|
| Commission / Contingency | 20–30 % of first-year salary | After hire signs | “Replacement fees,” ballooning costs on senior hires |
| Retained / Executive Search | ⅓ upfront + ⅓ short-list + ⅓ offer (often 25–35 %) | Throughout search | You pay even if you fill the role yourself |
| Fixed-Fee (Funded.club style) | €3,900–€9,000 per role (≈ 6–7 % for most startup salaries) | Small advance + balance after hire signs | None—price is price, no % surprises |
🚀 Why Commission Made Sense (in 1995)
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High salaries, low turnover: corporate VP roles paid six figures and stayed for years.
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Resume fax machines: sourcing was literal leaf-raking; agencies guarded their Rolodex.
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Startups were rare: the fee was a rounding error for Fortune 500 budgets.
2025 reality? Startups hire fast, iterate titles, and remote talent is global. The old model creaks louder than a modem handshake.
📊 Real-World Math: Commission vs. Fixed-Fee
| Example Role | Salary | Commission @ 25 % | Funded.club Fixed Fee | Savings |
|---|---|---|---|---|
| Senior Backend Engineer | €95k | €23,750 | €6,500 | €17,250 |
| Head of Growth | €120k | €30,000 | €9,000 | €21,000 |
| Customer Success Rep | €50k | €12,500 | €3,900 | €8,600 |
(Multiply that by five hires and you’ve got a seed-round extension.)
🏴☠️ Commission Pitfalls No One Puts in the Brochure
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Misaligned incentives – Agencies push higher salary offers (bigger % for them, higher burn for you).
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Candidate churn? You pay again – 90-day replacement promises often exclude voluntary quits.
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“Free” until hired – Sounds nice… until three firms carpet-bomb LinkedIn and taint your brand.
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Role inflation – Agencies nudge you to senior titles to justify bigger fees. (Do you really need a VP of Ops at 12 people?)
True tale: A London SaaS startup paid £28 k commission for a VP Sales who left at month 8. Replacement discount? 20 % off the next £28 k. Founder’s reaction: 🍋.
🔒 Why Fixed-Fee Fits Startup DNA
| Startup Need | Fixed-Fee Advantage |
|---|---|
| Budget certainty | Fee is set; board & CFO stay calm. |
| Speed | Recruiter paid to fill, not haggle over comp. |
| Role agility | Need to tweak scope mid-search? No % recalculation nightmares. |
| Culture fit | Fixed-fee partners focus on successful placement > paycheck size. |
Flashback: When Supernova.io scaled post-funding, they hired 14 roles via Funded.club, saved > €210k, and eliminated an in-house recruiting team. (CEO’s words, not ours.)
🧐 “Isn’t Fixed-Fee Just a Commission in Disguise?”
Nope.
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No salary-based upsells.
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No multi-tier retainers.
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One transparent invoice, zero footnotes.
That’s why our average cost is ~6 – 7 % of salary—less than one-third of traditional agency pricing.
✏️ TL;DR Cheat Sheet for Founders
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Pre-seed / Seed: Burn is life. Fixed-fee keeps costs predictable.
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Series A–B blitzscaling: Multiple hires? Commission stacks like LEGO fees. Fixed-fee scales linearly.
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C-level searches: Executive retainers still have a place—just know every tranche before signing.
🛠️ Ready to Slash Hiring Costs?
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Compare your numbers with our free Recruiting Cost Calculator.
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Or jump straight in—Book a call and see candidates in < 7 days.
Funded.club: Fixed-fee. Fast. Founder-friendly. (And yes, we still use Slack.)
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