A contingency agreement reads like a risk-free deal. You pay nothing unless someone is hired. No retainer, no commitment, no cost until a candidate signs an offer. For a founder watching every dollar of runway, that framing is hard to argue with. You only pay for results.
But the price of a result is higher than it looks, and the structure that makes it feel free is the same structure that shapes how the firm behaves. Before you sign, it is worth running the math you would run on any other recurring cost. Not the cost of one hire. The cost of the hiring you actually plan to do.
The number on a single hire
Contingency firms typically charge 20 to 25 percent of first-year salary. On a single hire at $160,000, that is roughly $40,000. For one senior person, paid once, that can be defensible. The firm did the sourcing, ran the process, and produced someone you would not have found alone.
The problem is that the meter resets on the next role. Hire a second person and you pay again. A third, again. The fee is a per-unit cost. It scales linearly with exactly the thing a funded company needs to do most after a raise, which is hire several people at once.
Run it across a plan rather than a hire. Six senior roles at that rate is a quarter-million-dollar line item. It comes out of the capital you raised to build product and reach patients.
The incentives you are buying
Price is the visible part. The incentive structure is the part that actually determines what you get, and contingency aligns the firm with speed rather than fit.
The firm is paid when someone signs, not when someone stays. Nothing in the agreement rewards the patience to hold out for the right person over the merely available one. A faster placement is a faster invoice, and a candidate who is good enough to accept is, from the firm's side of the table, good enough to bill.
- Speed is rewarded over fit. The fee triggers on signature, not on tenure.
- Churn carries no penalty for the firm; a hire who leaves at month nine has already been paid for.
- Per-hire pricing punishes exactly the multi-role plans that funded companies run after a raise.
- The same candidate is often worth more to the firm placed quickly than placed well.
None of this requires bad actors. Decent recruiters operating inside a contingency model will still drift toward speed, because the model pays for speed. You are buying the structure they work inside, and the structure does not reward the thing you care about most, which is whether the person is still there a year from now.
You are buying the structure the recruiter works inside, and that structure outlasts every good intention in the room.
What a flat model changes
A subscription model inverts the math. You pay for the search, and the second hire costs nothing the first one did not already cover. FoundHuman's pricing is public: $7,500 per slot per month on a monthly plan, $6,750 on quarterly, $5,750 on annual, with no placement fees, ever.
Hold that against the contingency anchor. The fee that buys one $160,000 hire under contingency is, under a flat model, several months of a slot that can fill role after role in that window. A company hiring across a plan stops paying a tax on its own ambition. The more you hire, the better the math gets, which is the opposite of how contingency works.
It also changes what the firm is rewarded for. When the fee does not depend on a fast signature, the incentive to push a marginal candidate over the line disappears. The firm is paid to search well, and the founder and the firm are finally looking at the same outcome.
The cost that is not on the invoice
There is a second number that never appears on a contingency agreement, and it is larger than the fee. Replacement cost is commonly estimated, as an industry rule of thumb, at 100 to 200 percent of annual salary: recruiting again, ramping again, and the work that did not happen while the seat sat empty. A model that is paid the same whether the hire stays or leaves does nothing to protect you from that number. A model with skin in retention does.
Sign whichever agreement fits your plan. Just run the math on the plan, not the hire, and read the incentive alongside the price. The cheapest-looking structure is often the one that costs the most across a year of hiring.