How much does a staffing agency cost? Bill rate vs pay rate explained

The two numbers that matter

The pay rate is what the worker earns per hour before their own taxes. It is set by the local market for that role: a dishwasher in a small town and a forklift operator in a big metro are very different numbers.

The bill rate is what you pay the agency for each approved hour. It covers the worker's pay plus every cost of employing that worker and running the service. When a worker is a W-2 employee of the agency, the agency is the employer of record. That means the agency, not you, carries payroll taxes, workers' compensation and the paperwork.

The relationship between the two is usually expressed as a markup: bill rate divided by pay rate, minus one. A $26 bill rate on an $18 pay rate is a markup of roughly 44%.

What is inside the markup

A markup looks large until you list what it has to pay for. For a W-2 temp worker, the main costs are:

• Employer payroll taxes. Social Security and Medicare (FICA) are 7.65% of wages. Federal unemployment tax (FUTA) applies to the first $7,000 of each worker's wages, and state unemployment tax (SUTA) varies by state and by the employer's claims history.
• Workers' compensation insurance. Priced per $100 of payroll and set by state and job class. A roofer or demolition laborer costs far more to cover than a host or a cashier.
• General liability insurance for work done on your site.
• Screening and onboarding. Background checks, identity and I-9 verification, certification checks and orientation.
• Recruiting. Job ads, interviews and keeping a bench of ready workers so someone is available when you call at 5 a.m.
• Payroll and pay speed. Running payroll daily or next day costs more than paying every two weeks, and the agency usually pays workers long before you pay the invoice.
• Dispatch and support. The people who answer the phone, confirm workers, handle call-outs and send replacements.
• Margin. What is left after all of the above. For most staffing companies it is a thin slice of the bill rate, not the bulk of it.

A worked example

Here is how we build our own indicative rates. We start from a typical local pay rate and apply an all-in markup in the 40% to 55% range, depending on role risk, city and shift details. These numbers are estimates for illustration, and a dispatcher confirms the exact rate for your order.

So a crew of four loaders for an eight-hour shift at an $18 pay rate would land somewhere around $808 to $896 before any overtime. See current ranges by role on our pricing page.

Fees to ask about before you sign

The hourly rate is only half of the price. The other half lives in the service agreement. Ask every agency, including us, to answer these in writing:

1. 1Minimum shift length. Is there a minimum number of billed hours per worker per shift, and how many?
2. 2Cancellation terms. How late can you cancel without paying, and what do you pay if you cancel after that?
3. 3Overtime. Federal law requires time and a half over 40 hours in a workweek, and some states add daily overtime. Overtime is billed at a higher rate. Ask how it is calculated and who approves it.
4. 4Holiday and short-notice premiums. Are some days or same-day orders billed higher?
5. 5Conversion fees. What does it cost to hire a temp full-time, and does that fee go down the longer they have worked for you?
6. 6Platform or sign-up fees. Some apps add booking or service fees on top of the hourly rate.
7. 7No-show policy. If a worker does not show, do you pay anything, and how fast is a replacement sent?

A fair quote is one where these answers are simple. We publish indicative rates, charge no sign-up fees and back every order with a no-show guarantee.

How to compare quotes fairly

Line up quotes on an all-in basis. A lower hourly number with a four-hour minimum, a cancellation fee and a platform fee can easily cost more than a higher all-in rate with none of those.

Also compare what you are really buying: reliability. A cheap worker who does not show up costs you a full shift of lost output, overtime for the rest of your team and a manager's morning on the phone. Ask how the agency confirms workers before a shift, how it tracks check-ins and what happens in the first hour if someone is missing.

Finally, make sure the workers are W-2 employees of the agency with workers' comp in place. If they are 1099 contractors, some of the cost you are "saving" is risk you are quietly taking on. Our guide to W-2 vs 1099 gig workers explains why.

The bottom line

A staffing agency's bill rate pays for the worker, the taxes and insurance that come with employing them, and the people who make sure they show up. Expect an all-in markup somewhere around 40% to 55% for hourly crew work, higher for high-risk trades, and ask for every fee in writing.

Want a number for your job? Request workers and you will see an estimate before you confirm, then a dispatcher confirms the final rate.