Should my executive search firm switch from contingency to retained?

Your executive search firm should switch from contingency to retained when its contingency fill rate sits below its break-even fill rate. On a $250,000 base role, a 25% contingency fee against a 33% retained fee on $300,000 cash comp, 12 retained searches a year at an 80% fill rate beat 30 contingency roles unless contingency fills exceed 59%.

Rules of thumb (each is arithmetic from the worked example below or a cited source):

• Expected revenue per search = fee % x the comp the fee is charged on x the probability you collect each payment. Contingency collects only on a fill; retained collects in thirds.
• Break-even contingency fill rate = retained revenue a consultant expects in a year / full contingency fees that consultant could bill in a year. In the worked example that is $1,108,800 / $1,875,000 = 59.1%.
• The fee basis matters as much as the percentage: a contingency fee is often charged on base salary, a retained fee on first-year guaranteed cash comp (Pin, 2026).
• Under the thirds schedule, a retained search that delivers a shortlist but never fills still bills $66,000 in the example, more than a filled contingency search at $62,500.
• To replace 30 contingency roles at a 35% fill rate ($656,250), you need about 7.1 retained searches at an 80% fill rate.

How do retained, contingency and engaged search fees compare per search?

Retained, contingency and engaged search differ in fee size, fee basis and when each payment lands, so the same role earns very different expected revenue under each model. Heidrick & Struggles’ annual report says retained search firms are paid a retainer “equal to approximately one-third of the estimated first year compensation” (10-K for fiscal 2024, filed March 2025). Talentfoot’s fee guide puts contingency at “20 to 30%” paid “only on successful hire” and engaged at “25 to 33%” with a partial upfront payment (Talentfoot, 2026). Pin’s 2026 guide says engaged buyers pay “typically one-third to one-half of the projected total fee” upfront.

No credible public source reports fill rates by search model, so every fill rate below is a labelled assumption band. Replace them with your own placement records. Worked inputs (assumptions): a role with $250,000 base and $300,000 first-year guaranteed cash comp; contingency at 25% of base; retained at 33% of cash comp paid in thirds (signing, shortlist, placement), with the shortlist delivered on every search; engaged at 25% of cash comp with one-third upfront and the balance on placement.

Per search, retained wins at every fill rate in this example, because two-thirds of its fee does not depend on a fill. That is why the per-search comparison alone misleads: the real question is how many searches each model lets one consultant carry.

At what fill rate does retained search beat contingency for the firm?

Retained search beats contingency for a search firm when the firm’s contingency fill rate is below the break-even rate set by how many searches each consultant can carry a year. Retained work asks for more research, a structured shortlist and closer client contact per role, so a consultant carries fewer of them.

Assumption: one consultant runs 12 retained searches a year at an 80% fill rate, so expected retained revenue is 12 x $92,400 = $1,108,800. The table shows the contingency fill rate needed to match it for three assumed contingency workloads.

A contingency desk that carries 40 roles and fills more than 44.4% of them out-earns the retained desk in this example. A desk that carries 30 roles and fills 35% of them earns $656,250, about 59% of the retained figure. The break-even moves with capacity more than with fee percentage, so measure capacity honestly before you decide.

How do you calculate your own retained vs contingency break-even?

A search firm’s retained vs contingency break-even takes five numbers from its own records: both fee rates, the comp each is charged on, both fill rates and searches per consultant.

1. Contingency expected revenue per role: contingency fee % x base salary x contingency fill rate. Example: 25% x $250,000 x 35% = $21,875.
2. Retained expected revenue per search: retained fee % x cash comp x (1/3 + share of searches reaching shortlist x 1/3 + fill rate x 1/3). Example: $99,000 x (1/3 + 1/3 + 0.8/3) = $92,400.
3. Annual revenue per consultant: multiply each by the searches one consultant carries in a year. Example: 30 x $21,875 = $656,250 contingency; 12 x $92,400 = $1,108,800 retained.
4. Break-even contingency fill rate: retained annual revenue / (contingency roles x full contingency fee). Example: $1,108,800 / (30 x $62,500) = 59.1%.
5. Retained mandates needed: contingency annual revenue / retained expected revenue per search. Example: $656,250 / $92,400 = 7.1 searches.

If your retained contracts refund installments when a search fails, drop the signing or shortlist third from step 2 for that share of searches. Pull fill rates from the last 24 months of closed roles, counting withdrawn and cancelled roles as unfilled, or the break-even will flatter contingency.

What has to be true before a contingency firm switches to retained?

A contingency firm can switch to retained only when clients will sign a retainer, consultants can run a structured search, and the firm can win enough mandates to fill each consultant’s year.

• Clients who will pay upfront. Pin’s guide places engaged search at “the $150K-$200K comp band”, below full retained work; your clients’ appetite for a retainer may differ. Your own lost-proposal data is the real test.
• A shortlist you can deliver on a date. The middle third is billed at shortlist, so the firm needs a research process that produces one reliably.
• Mandate volume. In the example, each consultant needs about 7.1 retained searches a year just to match a 35% contingency desk, and 12 to reach $1,108,800.
• Cash to cover the transition. Contingency placements already in progress keep paying for months; the first retained installments only start once mandates are signed.

If any of these fails, the switch lowers revenue even when the table says retained wins.

Can a search firm run retained and contingency at the same time?

A search firm can run retained and contingency side by side, and engaged search is the common bridge between the two because it takes a smaller upfront payment.

In the worked example, an engaged search at a 60% fill rate is worth $55,000, more than double a contingency role at 35% ($21,875) and about 60% of a retained search at 80% ($92,400). A practical split is to quote retained for roles above the comp level where your clients have accepted retainers before, engaged for the band below, and contingency for roles where clients brief several firms anyway. Keep separate fill-rate records for each so the break-even stays honest.

How does moving to retained change a search firm’s business development?

Moving to retained search means a firm needs fewer but larger mandates, so business development shifts from volume job-order chasing to meetings with the executives who sign retainers.

In the example, one consultant needs about 7.1 to 12 retained mandates a year instead of 30 contingency roles, so every lost proposal costs more and every booked meeting with a CEO, CHRO or board member matters more. The method for building that pipeline (target accounts, cadence, which rung to fix first) is in our guide to client-side business development for recruiters, and what a booked client meeting is worth is worked through in cost per booked meeting for recruitment agencies.

Doing this yourself costs consultant hours: research, outreach and follow-up compete with the searches that pay. LeadsNow, which has booked 50,769+ AI-booked sales appointments since 2017 and generated 1M+ leads, runs that meeting-booking work for professional services firms; firms comparing outside help can also see the lead generation agencies for executive search firms.

Key takeaways

• Expected revenue per search equals fee % times the comp the fee is charged on times the probability of collecting each payment.
• With the assumed inputs, a retained search at an 80% fill rate is worth $92,400 against $21,875 for a contingency role at a 35% fill rate.
• A consultant running 12 retained searches beats one carrying 30 contingency roles unless contingency fills exceed 59.1%.
• Replacing 30 contingency roles at a 35% fill rate takes about 7.1 retained searches at an 80% fill rate.
• Engaged search at a 60% fill rate is worth $55,000 per search in the example, a middle step between the two models.

Retained vs contingency search: frequently asked questions

What is the standard fee for retained executive search?

Retained executive search fees are often around one-third of first-year compensation. Heidrick & Struggles’ 10-K for fiscal 2024 (filed March 2025) describes a retainer “equal to approximately one-third of the estimated first year compensation”, and that firms “often are authorized to bill the client for one-third of the excess” when actual pay exceeds the estimate (Heidrick & Struggles 10-K, fiscal 2024).

Does a retained search firm keep its fee if the role is not filled?

A retained search firm keeps whatever installments its contract says are earned; the thirds schedule bills at signing and shortlist, before any fill. Whether those payments are refundable is a contract term, so write it into the engagement letter rather than assuming it.

Is engaged search the same as retained search?

Engaged search is not the same as retained: it takes a smaller upfront payment, with the balance due on placement. Talentfoot puts engaged fees at 25 to 33% of first-year comp, between contingency and retained.

How many retained mandates replace a contingency desk?

Divide your contingency annual revenue by your retained expected revenue per search. In the worked example, $656,250 / $92,400 = about 7.1 retained searches per consultant a year.

Should a small search firm switch all its roles to retained at once?

A small search firm rarely needs to switch every role at once; moving only the roles where clients have accepted retainers before protects cash while you collect your own retained fill-rate data.

Sources

1. Heidrick & Struggles International, Form 10-K for fiscal 2024 (filed 3 March 2025)
2. Talentfoot, Retained vs Contingency vs Engaged Executive Search Fees (2026)
3. Pin, Retained vs Contingent Search: How to Choose in 2026