Recruitment Commission Thresholds: Designing Billing Tiers

A recruitment commission threshold is the amount a consultant must bill before they earn any commission — the agency's "cost of sale" — after which an accelerating set of bands pays them a rising share of further billings. Get the threshold right and it does two jobs at once: it guarantees the desk is profitable before you pay out, and it gives the consultant a clear, motivating target. Set it badly and it becomes the single biggest reason consultants either churn out before they ramp or get over-paid for unprofitable billing. This guide covers how to set the threshold, how often to reset it, and how to design the bands above it.

It's the detail behind the recruitment commission plans overview and applies to both perm and contract desks.

TL;DR

A recruitment commission threshold — the "cost of sale" — is how much a consultant must bill before they earn any commission, set to recover the fully-loaded cost of employing them. A common benchmark is billing two-and-a-half to three times that cost across a year to be clearly profitable, with a quarterly threshold and accelerating bands above it. Set it too high and new consultants never reach it and resign; too low and you pay accelerator rates on billing that barely covers cost. Most agencies reset quarterly and avoid capping the top band, since a cap simply makes consultants hold placements for the next quarter.

What does a commission threshold represent?

The threshold should equal the fully-loaded cost of employing the consultant over the period (this is what recruiters mean by "cost of sale") — not just their salary. That means base pay plus employer National Insurance (15% above the secondary threshold for 2026/27, per HMRC's rates for employers), pension contributions, desk and tooling costs, and a share of management overhead. Until a consultant bills that much, the agency is recovering its investment; everything above it is profit to be shared.

A common rule of thumb is that a consultant should bill two-and-a-half to three times their fully-loaded cost across a year to be clearly profitable, with the threshold set so they keep a meaningful share above it. The exact multiple depends on your margin and overhead — model it from your own numbers rather than copying a competitor's.

How do you set a recruitment commission threshold?

Three decisions turn "cost of sale" into a working threshold — the level, the reset cadence and the bands:

1. The level. Anchor it to fully-loaded cost, not bare salary. A consultant on a £30,000 base might cost the business £45,000+ once on-costs and overhead are included, so a quarterly threshold of around £11,000–£12,000 in billings (before commission) is a more honest starting point than one based on salary alone.

2. The reset cadence. Thresholds are usually reset quarterly — long enough to smooth out the lumpiness of perm placements, short enough to keep the target live. Monthly resets punish consultants in a slow month; annual resets let a strong Q1 carry a weak rest-of-year. Some agencies run a rolling threshold to avoid the "cliff" at period end. Whatever you choose, make it explicit.

3. The bands above it. Once the threshold is cleared, pay an accelerating share. These bands are the recruitment form of commission accelerators: they reward the consultant who keeps billing rather than coasting once they're profitable.

Quarterly billings	Rate on that band
£0 – £12,000 (cost of sale)	0%
£12,001 – £30,000	12%
£30,001 – £55,000	22%
£55,001+	30%

Worked example: a consultant bills £60,000 in the quarter. They earn nothing on the first £12,000, 12% on the next £18,000 (£2,160), 22% on the next £25,000 (£5,500), and 30% on the final £5,000 (£1,500) — £9,160 for the quarter, with the strongest band only reached by genuinely strong billing.

Don't cap the top, and be careful with decelerators

It's tempting to cap the top band or add a decelerator "to protect margin." In a billing role this almost always backfires: a consultant who hits the ceiling simply holds placements for next quarter, the recruitment version of sandbagging. The evidence on capping sales commission is consistent — caps cost you more in suppressed billing than they save in payout. If a windfall placement worries you, taper the rate on exceptional single fees rather than capping the consultant's quarter.

How do commission thresholds fail?

Set too high: new and mid-tier consultants never clear it, see no commission for months, and leave. You lose the people a good threshold was supposed to develop. Pair an ambitious threshold with a ramp draw or guarantee so new starters aren't on base alone while they build.

Set too low: consultants clear it easily and you pay accelerator rates on billing that barely covers cost. Margin erodes quietly, and your best billers feel under-rewarded relative to average ones who are also "in the money." A threshold pegged to real fully-loaded cost avoids both failure modes.

Benchmarking helps. The Recruitment & Employment Confederation publishes pay and productivity data you can use to sanity-check whether your thresholds and bands are competitive for the desk type and seniority.

Make the maths visible and automatic

A banded, threshold-based, quarterly-resetting plan is simple arithmetic but laborious to track by hand across a team — which is why it so often lives in a fragile billings spreadsheet that only one person understands. A commission platform applies the threshold and bands automatically, shows each consultant their live position against cost of sale, and exports the payout to Xero. The plan only motivates if people can see where they stand — automation is what makes that visibility real.

Frequently Asked Questions

How do you calculate a recruitment commission threshold?

Set it to the fully-loaded cost of employing the consultant over the period — base salary plus employer National Insurance, pension, desk and tooling costs, and a share of overhead — not just their salary. A common benchmark is that a consultant should bill roughly two-and-a-half to three times that cost across a year to be clearly profitable, with the threshold set so they earn a meaningful share above it.

How often should the threshold reset?

Quarterly is the most common cadence: long enough to absorb the lumpiness of placements, short enough to keep the target motivating. Monthly resets can unfairly punish a slow month, and annual resets let one strong quarter coast the rest of the year. Some agencies use a rolling threshold to avoid a hard cliff at period end.

What commission rate should apply above the threshold?

Use accelerating bands rather than a single rate — for example around 12% just above cost of sale, rising to 20–30% for high billers. The acceleration rewards consultants who keep billing once they're profitable. Avoid capping the top band; in a billing role a cap just encourages consultants to hold placements for the next period.

Should new consultants have a lower threshold?

Often it's better to keep the threshold consistent but bridge the ramp with a guaranteed minimum or a draw against commission for the first quarter or two, recovered from future billings. That way the profitability bar stays honest while a new consultant isn't left on base salary alone before their desk matures.

What happens if a consultant doesn't hit the threshold?

They earn no commission for that period and, depending on the plan, may carry forward against a rolling threshold or start fresh next quarter. This is why a ramp draw matters for newer consultants — without it, several quarters below threshold means base-only pay, which is the fastest way to lose people before their desk pays off.

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Written by the Commit Team — Commit applies recruitment thresholds, billing tiers and accelerators automatically, with live cost-of-sale tracking and a clean Xero export.