Staffing agency markup is the amount added to a worker’s pay rate to arrive at the bill rate you pay. It is the number employers ask about most, and the one least often explained clearly. Here is what it actually covers.
What the Markup Pays For
- Employer payroll taxes and unemployment insurance
- Workers’ compensation coverage
- Recruiting, screening, background checks, and drug testing
- Payroll processing, timekeeping, and benefits administration
- General liability coverage and the agency’s operating margin
A Simple Illustrative Example
Say a worker earns $18.00 per hour and the agency markup is 40%. The bill rate is $18.00 × 1.40 = $25.20 per hour. That is not pure profit: a large share goes to taxes, insurance, and administration you would otherwise carry yourself. Figures here are illustrative only and vary by role and risk level.
Why Markups Differ
- Workers’ comp class: warehouse and construction roles cost more to insure than office roles.
- Volume and duration: larger or longer contracts can earn a lower rate.
- Screening level: extra testing and certifications add cost.
- Shift and urgency: nights and same-day fills can carry a premium.
Questions to Ask Before You Sign
- Is the markup a flat percentage or built per role?
- Are overtime and holiday hours marked up the same way?
- What is the conversion fee if I hire the worker directly?
- What is included: screening, replacement, and safety onboarding?
The cheapest rate is not always the lowest cost. Turnover, no-shows, and injury claims add up quickly. See how we structure partnerships on our corporate staffing solutions page.
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