How much does a staffing agency cost?

It depends on the placement type. Temporary and temp-to-hire workers are billed at an hourly rate: the worker's pay plus a markup for the agency's employer costs, recruiting, and margin. Direct hire is a one-time fee, usually based on the role's first-year salary. The markup varies with the role's pay, skill level, shift, volume, and workers' compensation risk, so ask for a quote for your specific roles.

What does the staffing agency markup pay for?

Much of it covers costs any employer pays: the employer share of Social Security and Medicare taxes, federal and state unemployment taxes, and workers' compensation insurance. The rest covers recruiting, screening, payroll administration, on-site support, replacement of workers who do not work out, and the agency's margin.

What is temp-to-hire?

Temp-to-hire means a worker starts as the agency's temporary employee, and you can hire them onto your own payroll after a trial period. It lets you judge attendance, skill, and fit on your floor before making a permanent offer. Terms such as the trial length and any conversion fee vary by agency, so agree on them before the first day.

Is temp-to-hire better than direct hire?

Not always. Temp-to-hire is better when attendance and fit are hard to judge from an interview, which is common for warehouse and production roles. Direct hire is better for permanent roles where skills are easy to verify up front, or where strong candidates will not accept a temporary start, which is common for engineers and supervisors.

Who is the employer of a temporary worker?

The staffing agency is the employer of record. It pays wages, withholds taxes, and carries workers' compensation. For safety, OSHA treats the agency and the host employer as jointly responsible, so the host employer still provides site-specific training and a safe workplace.

Temp vs. Temp-to-Hire vs. Direct Hire: How Staffing Agency Costs Work

How do temp, temp-to-hire, and direct hire compare?

The three options differ in who employs the worker, how you pay, and how much commitment you make up front.

	Temporary	Temp-to-hire	Direct hire
Who employs the worker	The staffing agency	The agency during the trial, then you	You, from day one
How you pay	Hourly bill rate	Hourly bill rate, then the terms agreed for conversion	One-time placement fee
Who runs payroll, taxes, and workers' comp	The agency	The agency during the trial	You
How fast someone can start	Fastest. Often within days	Fast. Same as temporary	Slower. Interviews and notice periods
Commitment	None beyond the assignment	None until you decide to hire	A permanent hire
If the worker does not work out	The agency replaces them	The agency replaces them during the trial	Depends on the agency's guarantee
Best for	Peaks, projects, cover for absences	Ongoing roles where fit is hard to judge from an interview	Permanent and skilled roles with clear requirements

How does staffing agency pricing work?

Temporary and temp-to-hire: the bill rate

For temporary and temp-to-hire workers, you pay the agency an hourly bill rate for every hour worked. The bill rate is the worker's hourly pay plus a markup.

The markup is often misread as pure agency profit. Most of it covers costs you would carry yourself if the worker were on your payroll:

Employer payroll taxes. The employer pays 7.65% of wages for Social Security and Medicare, plus federal and state unemployment taxes.
Workers' compensation insurance. This costs more for physical work such as warehouse, forklift, and production roles than for office work.
Recruiting and screening. This covers advertising, interviewing, background checks, drug screening, and verifying certifications.
Payroll and administration. This covers timekeeping, paychecks, tax filing, and employment compliance.
Support and replacement. This covers check-ins after placement, and finding a replacement when a worker does not work out.
The agency's margin.

Direct hire: the placement fee

For direct hire, the agency recruits and screens candidates, and you hire the person onto your own payroll. You pay a one-time fee, usually calculated from the role's first-year salary. Many agencies offer a guarantee period: if the hire leaves early, they replace the person or refund part of the fee. Ask what the guarantee covers before you sign.

What makes the cost go up or down?

The same agency can quote very different markups for different roles. The main drivers are:

Pay rate and skill level. Roles that are harder to fill, such as IPC-certified electronics assemblers or experienced reach-truck operators, take more recruiting effort.
Shift. Overnight and weekend roles have smaller candidate pools and higher turnover.
Volume and length. A steady order for 20 workers over six months costs less per worker to support than a one-off order for a single day.
Workers' compensation risk. Warehouse and industrial roles carry higher insurance costs than clerical roles.
Screening requirements. Extra checks, such as a more detailed background check or a specific certification, add time and cost.

Which option is right for you?

Choose temporary staffing when:

demand rises and falls, such as fall and holiday peak, a new contract, or a project with an end date
you need to cover absences or leave
you need people within days and can't run a full hiring process

Choose temp-to-hire when:

the role is ongoing, but attendance and fit are hard to judge from an interview
you have had early turnover in the role before and want to see someone work first
you want to keep the strongest workers from a peak season

Choose direct hire when:

the role is permanent and the skills can be checked up front, such as engineers, supervisors, and quality managers
strong candidates won't leave a current job for a temporary start
you want the person on your own benefits and payroll from day one

Who temporary staffing is not right for

Temporary staffing is a poor fit for roles that need months of training before someone becomes productive, unless you plan to convert the worker. It's also a poor fit when your site isn't ready to give temporary workers the same safety training and supervision as your own staff. OSHA expects the host employer to provide site-specific training.

What mistakes do employers make when comparing staffing costs?

Comparing bill rates alone. A lower rate is no saving if the worker doesn't show up. One no-show on a production line or dock can cost more in lost output than a month of rate difference. Compare the cost per productive hour.
Not agreeing temp-to-hire terms up front. Agree on the trial length and any conversion fee before the first day, not when you want to hire.
Leaving safety responsibilities unclear. For forklift and other equipment roles, agree who covers training and the on-site evaluation before placement.
Ordering for day shift when the gap is nights. Order for the schedule you actually need covered. A worker who wanted days won't stay on nights.

What should you have ready before you call an agency?

To get an accurate quote and a fast start, have these ready:

The job title, duties, and any certifications required.
The number of workers and the start date.
Shift times, including overtime and weekend expectations.
The pay rate you have in mind, or ask the agency for a market rate.
Site details: location, safety equipment, dress code, and parking or transit access.
Whether you want temporary, temp-to-hire, or direct hire. If you aren't sure, ask the agency to recommend one.

How Pro-Tech prices staffing

Pro-Tech offers temporary staffing, temp-to-hire, and direct placement for electronics manufacturing, warehouse, light industrial, and administrative roles. We quote per role, so the price reflects the actual pay, shift, and screening the job needs. Every temporary worker we place is a Pro-Tech W-2 employee, so we carry the payroll, taxes, workers' compensation, and employment compliance.

For a quote, send us your roles, headcount, and start date. To see what our screening covers, read how we screen candidates. For warehouse and forklift hiring in Dallas-Fort Worth, see warehouse staffing in DFW and forklift operator staffing.