Which costs more: direct hire or temp-to-perm?

Typically temp-to-perm costs more total. While the upfront placement fee is lower or none, the markup during temp period plus any conversion fee often exceeds direct hire's one-time percentage. Clients pay for the trial period benefit.

How long is a typical temp-to-perm period?

Most temp-to-perm arrangements run 90 days (3 months), though 60 days and 6 months are also common. The period should be long enough to assess fit but not so long that candidates lose interest.

What if the client doesn't convert temp-to-perm?

The assignment ends and the candidate returns to the market (or your talent pool). Track client conversion rates—clients that rarely convert may not be worth the temp-to-perm model. Some agencies require minimum temp periods to ensure revenue.

Can temp-to-perm convert early?

Yes, often with an early conversion fee. Contracts should specify: minimum temp period, early conversion terms, and fee structure. Early conversions can be profitable but ensure you're compensated for the accelerated timeline.

Which costs more: direct hire or temp-to-perm?

Typically temp-to-perm costs more total. While the upfront placement fee is lower or none, the markup during temp period plus any conversion fee often exceeds direct hire's one-time percentage. Clients pay for the trial period benefit.

How long is a typical temp-to-perm period?

Most temp-to-perm arrangements run 90 days (3 months), though 60 days and 6 months are also common. The period should be long enough to assess fit but not so long that candidates lose interest.

What if the client doesn't convert temp-to-perm?

The assignment ends and the candidate returns to the market (or your talent pool). Track client conversion rates—clients that rarely convert may not be worth the temp-to-perm model. Some agencies require minimum temp periods to ensure revenue.

Can temp-to-perm convert early?

Yes, often with an early conversion fee. Contracts should specify: minimum temp period, early conversion terms, and fee structure. Early conversions can be profitable but ensure you're compensated for the accelerated timeline.

Recruiting

What is Direct Hire vs Temp-to-Perm?

Q: What is direct hire vs temp-to-perm?

Direct hire (permanent placement) immediately places candidates as full-time employees of the client. Temp-to-perm starts as temporary employment through the staffing agency with intent to convert to permanent after a trial period.

Definition: Direct hire is a permanent placement where candidates immediately become full-time employees of the client; temp-to-perm is a contract-to-hire arrangement where candidates work temporarily before converting to permanent employment after a trial period.

Also known as: Contract-to-Hire, Permanent Placement, Temp-to-Hire, Direct Placement

Quick Summary

TL;DR

Direct hire (permanent placement) puts candidates immediately on the client's payroll as full-time employees. Temp-to-perm (contract-to-hire) starts as temporary employment with conversion to permanent after a trial period. Each model has different fee structures, risk profiles, and use cases for staffing agencies.

15-25% vs 20-30%

direct hire vs temp-to-perm fees

Key Facts

Direct Hire

Immediate permanent employee

Placement type

Temp-to-Perm

Trial period then convert

Placement type

Fee Difference

Direct hire typically lower %

Fee structures

Client Risk

Temp-to-perm is lower risk

Client perspective

Choosing the Right Placement Type

Clients and candidates often don't understand the differences between placement types, leading to misaligned expectations. Some clients default to direct hire when temp-to-perm would reduce risk. Others want temp-to-perm but don't realize it often costs more total. Staffing agencies need to consult on the right approach while structuring deals that work for everyone.

Common Pain Points

1Clients unsure which placement type fits their needs
2Fee structure confusion between models
3Candidates uncertain about temp-to-perm conversion likelihood
4Managing conversion fees and timelines

Understanding Placement Types

Each model has distinct characteristics and use cases.

1
Assess Client Needs
Urgency to fill? Confidence in hiring decisions? Budget constraints? Risk tolerance? These factors determine optimal placement type.
2
Explain Trade-offs
Direct hire: faster, lower total cost, but no trial period. Temp-to-perm: trial period, but higher total cost and candidate uncertainty.
3
Structure the Deal
Direct hire: percentage of salary. Temp-to-perm: markup during temp period plus conversion fee (or markup only if temp period meets minimum).
4
Set Expectations
Clear contracts defining temp period length, conversion timeline, and fee structures prevent disputes and ensure smooth placements.

Result

Recommending the right placement type builds client trust and candidate satisfaction.

Placement Types Deep Dive

Fee Structure Comparison

Direct hire fees typically range from 15-25% of first-year salary, paid after start date (often with guarantee period). Temp-to-perm includes markup during temp period (20-50%) plus conversion fee (varies). Total temp-to-perm cost often exceeds direct hire—clients pay for the trial period benefit.

Direct Hire Fee

15-25% of salaryOne-time placement fee

Temp-to-Perm Markup

20-50% markupDuring temp period

Conversion Fee

Varies by agreementUpon permanent hire

When to Recommend Each Type

Direct hire works best when: client has strong interview process, position is well-defined, client has budget for placement fee, and urgency isn't extreme. Temp-to-perm works when: new role with unclear requirements, client wants trial period, candidate pool is uncertain, or budget is spread over time rather than upfront.

Candidate Perspective

Some candidates prefer direct hire for immediate stability and benefits. Others accept temp-to-perm as way into desired companies. Be transparent about conversion rates—clients that rarely convert frustrate candidates and damage your reputation. Track conversion rates by client.

Common Misconceptions

Temp-to-perm is always cheaper than direct hire
All temp-to-perm positions convert to permanent
Direct hire means no guarantee period
Candidates always prefer direct hire

Direct Hire vs Temp-to-Perm Comparison

Key differences between placement types
Factor	Direct Hire	Temp-to-Perm
Employment Start	Permanent from day one	Temporary then converts
Trial Period	None (guarantee period)	Built-in trial (3-6 months typical)
Fee Structure	% of salary (15-25%)	Markup + conversion fee
Total Cost to Client	Often lower	Often higher total
Client Risk	Higher (no trial)	Lower (can end temp)
Candidate Benefits	Immediate	After conversion

Key differences between placement types

Frequently Asked Questions

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Quick Summary

Key Facts

Choosing the Right Placement Type

Common Pain Points

Understanding Placement Types

Assess Client Needs

Explain Trade-offs

Structure the Deal

Set Expectations

Placement Types Deep Dive

Fee Structure Comparison

When to Recommend Each Type

Candidate Perspective

Common Misconceptions

Direct Hire vs Temp-to-Perm Comparison

Related Terms

Frequently Asked Questions

1What is direct hire vs temp-to-perm?

2Which costs more: direct hire or temp-to-perm?

3How long is a typical temp-to-perm period?

4What if the client doesn't convert temp-to-perm?

5Can temp-to-perm convert early?

Related Resources

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Professional Candidate Presentations