Conversion fee calculator: when a buyout breaks even
Enter your deal below. The calculator shows the perm fee target, your hourly temp margin, the break even point where accumulated margin equals the fee, what remains owed at your milestone, and the bill rate needed to make a free conversion painless.
Defaults show the worked example from this guide. They are illustrative only, not benchmarks. Enter your own numbers.
The deal
The verdict
Estimates only. Burden varies by state and workers comp class code. BOSS partners model deals with live comp rates in the profit calculator.
When does a temp assignment break even against a conversion fee?
Divide the perm fee target by the hourly gross margin, which is the bill rate minus burdened pay. The result is the number of billable hours at which accumulated temp margin equals the fee. Past that point a waived conversion costs the agency nothing. The calculator above runs this break even for any deal.
Pricing Guide
Temp-to-Hire Conversion Fees: How the Pricing Actually Works
There is no single right way to price a temp-to-hire conversion fee. There is, however, a right way to think about it: model the margin, structure milestones that reward retention, and put the clause in writing before the first hour is worked. This guide walks the whole decision, with real numbers.
A conversion fee is what a client pays to hire your temp worker directly. It exists because without one, clients can use your agency as a free trial service: try the worker on temp, hire them away, pay you nothing for the recruit. The fee protects the value of the placement. How big it should be, and when it should shrink to zero, is a pricing strategy question, and the answer comes from your margin math.
Frame Your Position Early
Tell clients up front that you are happy to earn your fee either way: temp or search. Neither path “saves” them the fee, because the fee is not the product. The product is a vetted worker and a compliant placement, and the real savings for the client is avoiding a mis-hire. Setting that frame in the first conversation makes every later conversion negotiation easier.
Run the Math Before You Set the Fee
The right structure becomes obvious once you model the deal. Take a real example: pay rate $40 per hour, bill rate $60, which annualizes to roughly an $80,000 salary. A typical search fee of 25% would target $20,000. Now the temp side: assume an employer burden (FICA, FUTA, SUTA, excluding comp and benefits) around 13% of pay, or $5.20 on the $40. Your hourly profit is $60 minus $40 minus $5.20 = $14.80, about a 24.7% gross margin. Six months on assignment (roughly 1,000 hours) earns $14,800 in temp margin. A full year earns about $29,600, more than the $20,000 search fee. That comparison is the entire fee decision in one line: the longer the assignment runs, the less conversion fee you need to be whole. Actual burdens vary by state and by workers’ comp class code, which is why BOSS partners price deals in the profit calculator, with live comp rates by state and class code, before quoting.
Structure Milestones That Reward Retention
If the contractor lasts six months, you have already earned around $14,800 in temp margin, so a practical schedule looks like: a modest conversion fee at six months (say $5,000), and free conversion at nine. The client sees a clear path to owning the hire, the fee shrinks as your margin accumulates, and nobody feels penalized for a placement working out. Many agencies run 6/9/12 month tiers on the same logic.
When Less Is More
Some firms go further: free conversion at six months, eating the difference deliberately. The reasoning is volume. Most markets have far more temp openings than search ones, and a client who knows conversions are painless sends you more orders. Faster conversions can mean more placements, more cumulative temp margin, and more accounts, which beats defending a $5,000 fee. If you see competitors advertising “zero conversion fee,” this is the strategy behind it, and it only works when the markup is set to carry it.
The Fee and the Markup Are One Decision
Conversion fee and markup trade against each other. Run a lower markup and you need a higher conversion fee to recoup the recruit’s value. Run a higher markup and you can discount the fee, or zero it, to close deals quickly. Either mix can be right; what is wrong is setting them independently and discovering the placement never pays for itself. Price the pair, in writing, in every client agreement, including what counts as a conversion (hiring your temp directly, through another agency, or within a defined window after the assignment ends).
Where the EOR Fits
All the math above depends on knowing your true burden, and that is the quiet advantage of running placements through an employer of record: taxes, workers’ comp, and compliance are priced into the placement from day one, so the margin model is real, not estimated. Conversions themselves get cleaner too, with documented employment records, COIs on request, and a compliant handoff when the worker moves to the client’s payroll. If you are building a temp desk from scratch, our guide on how to start a temp agency covers the rest of the model.
Every BOSS partner prices deals in the Profit Calculator
Pay rate, bill rate, markup, stipends, and live workers’ comp rates by state and class code: BOSS partners model any placement, including the temp-to-hire math on this page, in seconds. It comes with every plan the day you enroll.
Temp-to-Hire Fee FAQs
How does temp-to-hire staffing pricing work?
The client pays an hourly bill rate during the temp assignment, and a conversion fee if they hire the worker directly. The fee typically shrinks the longer the assignment runs, because the agency recovers the placement’s value through temp margin over time.
How much is a typical conversion fee?
Structures vary widely. Common approaches scale a search-fee equivalent (often 20% to 25% of salary) down by hours or months worked: a modest fee at six months, free conversion at nine to twelve. The right number comes from your margin math, not a standard rate card.
What conversion milestones work best?
A common schedule is a small fee at six months and free conversion at nine to twelve months, which rewards retention and reduces friction. Map milestones to the temp margin you have actually accumulated at each point.
Why do some agencies charge zero conversion fees?
It is a deliberate volume strategy: a higher markup carries the recruit’s value, and painless conversions win more orders and more accounts. It works when the markup is priced for it, and loses money when it is not.
Should the conversion clause be in the client contract?
Always, and before the first hour is worked. Define the fee schedule, what counts as a conversion (direct hire, hire through another agency, or hire within a set window after the assignment), and how the fee prorates by time worked.
How does an EOR change the conversion math?
An employer of record makes the true employment burden (taxes, workers’ comp, compliance) predictable and priced into each placement, so margin models are accurate and conversions hand off cleanly with complete employment records.