GGoodstead HRMarketing site
Back

Business Model

Below is how most HR consulting businesses bill. A big part of the sales process is figuring out which one fits best for a prospect.

I also know of some companies that quote a fixed fee for a project. It's an option, but I think it's risky & dumb. If you just do hourly billing, both you and the client win.

1

Monthly Retainer

e.g. $3-6k/month; a flat fee that includes up to some number of hours

  • A flat monthly fee for a fixed scope of ongoing work
  • Day-to-day HR operations up to fractional CHRO work
  • Retainers are invoiced at the beginning of the month
  • Typical pricing by scope (NY-based clients):
    • HR operations only — run payroll, benefits admin, onboarding/offboarding for a ~10-30 person company: ~$2.5-4k/month
    • Ops + one practice area — e.g. also own performance management, or handbook/compliance upkeep: ~$4-7k/month
    • HR director level — multiple practice areas, manager coaching, recruiting coordination: ~$7-10k/month
    • Fractional CHRO — strategy, exec/board work, comp planning, org design (~1-2 days/week): ~$10-16k/month
2

Hourly Billing

e.g. $125/hr

  • Just as good as a retainer
  • Sometimes worth less, but the client never wonders _are Danielle's services worth it?_
  • Just track in a spreadsheet & invoice once a month
  • NeoCoast just assigns one person that commands a certain price point, plus a CTO that occasionally bills at the CTO rate. I might pay $140/hr for a generalist/manager that also does some coordinator work. I (wearing my customer hat) like that model - it makes me feel like they're being judicious with what kinds of services I actually need.
  • NY market reference points:
    • Admin/coordinator work — data entry, filing, scheduling: $75-100/hr
    • Generalist/manager work — day-to-day ops, employee relations, policy drafting: $125-175/hr
    • Director-level work — comp benchmarking, HRIS selection, investigations: $175-250/hr
    • CHRO-level advisory — exec coaching, org strategy, M&A diligence: $250-400/hr, or a $2-3k day rate for on-site/workshop days
3

Recruiting: Per-Hire Fees

e.g. X% per hire

  • Invoiced on candidate's start date
  • Sometimes scaled to seniority and search difficulty
  • Sometimes has a replacement guarantee if the hire doesn't work out within the guarantee window.
  • Typical fees by search type:
    • Straightforward IC roles — coordinator, AE, support: flat $6-10k or ~15% of first-year base
    • Specialized/senior ICs — engineers, senior finance, niche skills: 18-20%
    • Executive searches — VP and up: 25-30%, often partially retained (paid in thirds: kickoff, shortlist, start date)