How do temp agencies make money?

Temp agencies make money through a variety of methods. Here are some of the primary ways they generate revenue.

Client fees

Temp agencies charge fees to the companies or organisations that hire their temporary employees. These fees are typically based on a percentage of the employee's hourly or daily wage. The agency negotiates the terms and rates with the client, and the client pays the agency for the temporary staffing services provided.

Markup on employee wages

Temp agencies often pay their temporary employees an hourly or daily wage and then charge the client a higher rate for the employee's services. This markup allows the agency to cover its costs, including recruitment, screening, administrative expenses, and profit margin. The markup amount varies depending on factors such as the industry, job type, and skill level.

Placement fees

In addition to temporary staffing, agencies may also offer permanent placement services, helping companies find full-time employees. When a temp agency successfully places a candidate in a permanent position, they charge the client a placement fee. This fee is usually a percentage of the candidate's annual salary and is paid by the client to the agency.

Contract or project-based work

Some temp agencies provide specialised workers for short-term contracts or specific projects. In such cases, the agency negotiates a fixed contract rate with the client based on the project's requirements. The agency then pays the temporary employees a predetermined amount while retaining the difference as profit.

Additional services

Temp agencies may offer value-added services to their clients, such as skills testing, background checks, drug screenings, payroll management, and employee training. These services often come at an additional cost and contribute to the agency's revenue stream.

It's important to note that the specific revenue model and fee structure can vary between temp agencies. Some agencies may focus on a particular industry or niche, while others offer a broader range of services.

If you'd like more information regarding what temp agencies do, check out Indeed's article on what temp agencies are and how they work.

Additionally, if you'd like more information on how recruitment agencies in general make money in Australia, click the button below to read our article on the topic.

How do temp agencies make money?