If you’re managing production schedules, tracking shift coverage, or ramping up for seasonal demand, you know how critical it is to have a reliable workforce. And if you’ve ever worked with a staffing partner, you might have wondered: How exactly do they make money?
Understanding how staffing firms generate revenue and what you’re actually paying for can help you plan smarter, budget more accurately, and avoid costly surprises. Let’s break down the two most common staffing models and where profit fits into the picture.
How do staffing firms make money from temporary staffing?
When you bring on temporary workers through a staffing agency, you’re billed an hourly rate. That rate includes the employee’s base pay plus a markup, which is how the staffing firm covers employment costs and generates profit.
But most of that markup isn’t profit. It typically covers:
- Payroll taxes and required insurance (e.g., FICA, FUTA, SUTA, unemployment, etc.)
- Workers’ compensation and liability insurance
- Optional benefits (e.g., health insurance)
- Recruiting and onboarding support
- Scheduling, timekeeping, and payroll processing
- Profit margin (what remains after costs)
Here’s an example: Let’s say you need a Forklift Operator and are comparing the cost of using Doherty vs. hiring and retaining directly. Here’s how the numbers stack up over a 13-week assignment:
Even with a higher bill rate, partnering with Doherty can save your business time, risk, and money, thanks to streamlined onboarding, compliance coverage, and reduced overhead.
How do staffing firms make money from direct hire placements?
In a direct hire model, the agency charges a one-time placement fee after successfully placing a full-time employee on your team. This is usually 20%–30% of the employee’s annual salary and reflects the resources and time invested in recruiting.
The fee covers:
- Candidate sourcing and screening
- Interview coordination and feedback
- Offer negotiation and compliance checks
- Placement guarantees (in some cases)
- Profit margin
For example, you hire a Maintenance Technician with a starting salary of $55,000. A 20% placement fee equals $11,000, which might break down like this:
That leaves the firm with a 27% margin on the placement fee, or just 5.5% of the employee’s first-year salary after investing time, tools, and guaranteed service to deliver the right hire. While every business case is different, clients often find that Doherty’s placement fees are offset by time savings, hiring quality, and reduced risk, especially in high-turnover roles.
And if the candidate doesn’t work out? Many placements include a guarantee period, so you’re not left restarting from scratch.
Why does this matter to you as a client?
Because when you understand the numbers, you can:
- Make informed staffing decisions based on real value
- Negotiate more effectively with transparency and trust
- Spot red flags if pricing seems unsustainably low
At Doherty Staffing Solutions, we believe clear pricing leads to stronger partnerships. That’s why we’re upfront about how we price our services, what’s included in your rate, and how we work to make your staffing investment go further.
Want to see the numbers in action? Explore our case studies to learn how Doherty helps clients reduce costs, improve fill rates, and maintain workforce flexibility. Or, if you’re interested in learning more about how pricing functions when you work with a staffing partner, discover more resources in our Learning Center.
