In short
Executive search fees are usually a percentage of the hire’s first-year target compensation, paid by the employer. A published benchmark comes from Germany: specialised search firms charged an average of 27.5% of target income in 2024, according to the BDU consultancy federation. A retained search is exclusive and paid in stages, often thirds: on engagement, after suitable candidates are presented, and when the hire signs. Compare offers on the fee base, expenses, guarantee and cancellation terms.
Key takeaways
- Executive search fees are mostly a percentage of target compensation; Germany’s BDU survey found an average of 27.5% for 2024.
- A retained search is exclusive and paid in instalments, often by the rule of thirds: on engagement, after suitable candidates are presented, and when the hire signs.
- Contingency search costs nothing without a hire, but a provider paid only on success rarely stays long on a difficult search.
- Agree what “compensation” means: base salary, target income or total package give clearly different amounts at the same percentage.
- Put expenses, profile changes, cancellation, further hires, off-limits and the replacement guarantee in writing; the guarantee usually covers probation.
- A search firm adds less when a strong internal candidate exists, the applicant market is broad or the role is not yet defined.
Executive search fees: how the fee is calculated
Executive search fees are paid by the hiring company, and a headhunter’s fee is usually tied to the pay of the role. The annual survey of the BDU, the German federation of management consultancies, puts the average fee in 2024 at 27.5% of target income, after 28% the year before. Respondents were almost 200 search firms working exclusively and mainly on a retained basis (BDU, 2025). The 2026 edition reports no fundamental change in fee levels or structures (BDU, 2026). Every figure in this article describes market practice, not LEADBeyond’s terms.
Definition
Retained search A search in which a company engages one search firm exclusively and pays its fee in instalments as the work or time progresses, not only when someone is hired. The first instalment falls due on engagement and covers set-up and research. The alternative is contingency search, paid only if someone is hired.
A joint guide by Germany’s association of HR managers (BPM) and the BDU describes the same practice: firms often charge around 30% of the planned or contractually agreed annual gross income. It recommends fixing the final price so the budget is predictable (BPM and BDU, 2019). The guide names four drivers: position, pay, difficulty and search method. In practice:
- Position and pay. A percentage fee rises with the income of the person hired. The BDU places the largest share of 2024 placements, 31%, in the €100,000–150,000 band.
- Difficulty. Few suitable people, strong competition for the same profiles or a necessary relocation all lengthen a search.
- Search method. An advert reaches people who are actively looking. A systematic market map also covers people who are not, which takes research time; see talent mapping in executive search.
Retained vs contingency search and other fee models
For a permanent hire, there are five models. They differ in when you pay and who carries the risk of a failed search. Interim assignments are billed by the day instead. The AIMP market study puts the average client day rate in Germany for 2025 at about €1,367 net, excluding travel and including any provider margin (AIMP, 2026).
| Model | When you pay | Who carries the risk | What to check |
|---|---|---|---|
| Retained (exclusive search) | In instalments, the first on engagement | Shared: instalments due before cancellation are payable | Tie instalments to verifiable milestones |
| Contingency | Only when someone is hired | The provider | How long will they persist if it gets hard? |
| Hybrid of fixed and success fees | A base amount up front, the rest on success | Shared | Is the base amount credited against the total fee? |
| Fixed fee | An agreed sum, often in instalments | The company, with a predictable amount | Describe the scope precisely |
| Time and materials | By hours, volume or service | The company | Common for extras such as references or assessments |
| Interim day rate | Per day worked | The company | Travel costs and provider margin shown separately |
The BPM/BDU guide is frank about pure contingency: a provider paid only on success can usually spend only a short time on a search. A fixed fee keeps the firm neutral towards internal candidates, because it earns nothing extra from an external hire. The global association AESC states that its members work on a retained and exclusive basis in executive search (AESC, 2025). We found no neutral survey of contingency fee percentages.
Payment stages and the fee base
A particularly common arrangement in Germany, according to the BPM/BDU guide, is the rule of thirds. The first instalment is invoiced on engagement and the second after suitable candidates are presented. The last follows when the hire signs the employment contract or, possibly pro rata, when the project ends otherwise. Fixed-date instalments are a variant. Under the BDU’s professional principles, the first instalment covers set-up and research and reflects the exclusive mandate (BDU principles, 2025).
Just as important is the base. The guide distinguishes annual base salary, taxable annual gross pay, annual target income (base plus bonus) and total compensation including company car and pension. Its sample clauses count variable pay at 100% target achievement and quote fees plus VAT. The same rate moves with the base:
| Fee base | What it includes | Amount in the example | Fee at 27.5% |
|---|---|---|---|
| Annual base salary | Fixed salary only | €150,000 | €41,250 |
| Annual target income | Base salary plus bonus at 100% target achievement | €180,000 | €49,500 |
| Total compensation | Target income plus a company car at a flat €6,000 | €186,000 | €51,150 |
What the fee covers – and what costs extra
What a fee covers is in the proposal, not the percentage. According to the BPM/BDU guide and the BDU principles, the scope can run from briefing, role profile and target company list to direct approach and in-depth interviews. It ends with confidential candidate reports, references taken with consent, and onboarding support. The client also receives a written overview of the search method, including any AI-based tools, and the firm, not the tool, decides how their output is used. More in AI in executive search.
- Expenses. Travel, accommodation and hospitality, as a flat rate or against receipts. Flat rates are predictable, receipts more transparent.
- Third parties. Job adverts, tests or external assessments.
- Additional services. Reference checks, assessments or coaching, often charged on a time basis.
- Profile changes. If the search profile changes substantially, the BDU principles call for a fee adjustment.
- Further hires. Hiring other candidates the firm presented is usually chargeable; a sample clause in the guide uses one year from engagement.
Replacement guarantees: what is usual
A replacement guarantee is customary. Under the BDU principles, firms usually commit to refilling the role if the hire leaves during probation. In Germany, the shortened two-week notice period that applies during probation lasts at most six months (§ 622(3) BGB; general information, not legal advice). Cases outside the firm’s control are excluded: the role being cut, a changed remit, a change of leadership, misconduct by the hire’s manager, insolvency or relocation of the business. The BPM/BDU guide recommends defining four points:
- Period. Until the end of probation, or a fixed number of months after the start date.
- Cases. No-show, resignation, dismissal by the company, possibly limited to reasons the firm is responsible for.
- Deadline. When you must claim the replacement, for example within two months of notice being given.
- Remaining costs. Which costs you still carry in a fee-free replacement search, such as expenses or new adverts.
Contract checklist for an executive search engagement
The global association AESC expects the terms of an engagement to be in writing: scope, timing, fees and payment schedule, deliverables, and terms on guarantees, off-limits, conflicts and data management (AESC, 2025). Combined with the BPM/BDU guide, that gives this checklist:
- Fee base and fixed price. Which definition of compensation applies, and what final amount is fixed?
- Payment schedule. Instalments tied to milestones or dates, and what “presenting suitable candidates” means in practice.
- Scope. Target company list, interviews, reports, references, reporting interval, onboarding support.
- Expenses. Flat rate or receipts, with a cap.
- Profile changes and cancellation. What falls due if the profile changes or the search ends early.
- Tail and further hires. Whether a fee is due if you later hire a presented candidate, or hire one for another role; a sample clause in the guide uses twelve months after the contract ends.
- Internal candidates. How internal applicants and people from your network are handled and charged.
- Guarantee. Period, cases, deadline and remaining costs.
- Off-limits. Which parts of your organisation the firm will not recruit from afterwards; large firms often set 6, 12 or 18 months after the last hire.
- Confidentiality and data protection. Who receives reports, and how data is transferred and deleted.
When a headhunter is not worth the fee
A search firm is not always the answer. Look inside first. In personnel data from one US investment banking business, workers promoted into jobs performed better in their first two years than external hires in similar jobs, and left less often. The external hires were initially paid around 18% more (Bidwell, 2011). That is one study in one industry, but a reason to take internal candidates seriously.
- A broad applicant market. For profiles where many suitable people apply actively, an advert is often enough.
- An unclear role. Settle what the role must deliver before the search. Under the BDU principles, firms flag unrealistic requirements early and decline mandates unlikely to succeed.
- No time on your side. Without prompt interviews and decisions, any search loses candidates.
- A bridge, not a hire. If you need someone for a few months, an interim assignment often fits better than a permanent hire.
The other side of the ledger is the cost of a wrong hire, which no proposal shows. It includes another search if no guarantee applies, months with the role empty, onboarding time, separation costs and unrest in the team. We found no reliable figures for senior roles. So compare the fee not with nothing, but with the risk of a long vacancy or a wrong hire.
How LEADBeyond Recruit runs a search
LEADBeyond Recruit is LEADBeyond’s executive search line, based in Grünwald near Munich. Our founders, Frederic C. Rupprecht and Jonathan M. Günak, come from McKinsey & Company and Roland Berger and lead every mandate personally. Each search starts with a map of the relevant market, not a list of names. We measure every profile against clear, role-specific criteria; candidates are also assessed in structured interviews and references, including against the leadership dimensions we work with in Empower. A live dashboard shows where the search stands. How we assess former McKinsey, BCG and Bain consultants is covered separately.
Frequently asked questions
How much does an executive search firm charge?
Usually a percentage of the hire’s first-year target compensation, plus VAT and often expenses. Germany’s BDU survey found an average of 27.5% of target income among specialised search firms in 2024 (BDU, 2025). On an invented target income of €180,000, that would be €49,500. It is market practice, not a price list.
What is a retained search fee?
The fee for an exclusive search, paid in instalments as the work progresses rather than only on a hire. The first instalment, due on engagement, covers set-up and research. In Germany, the BPM/BDU guide calls the rule of thirds a particularly common payment pattern and names around 30% of annual gross income as a frequent fee.
What is the difference between retained and contingency search?
In a retained search you engage one firm exclusively and pay by progress, even if the search fails. In contingency search you pay only on a hire, and the provider usually does not work exclusively. The BPM/BDU guide notes that a provider paid only on success can often spend only a short time on a search.
When do you pay an executive search firm?
In a retained search, in instalments. A common pattern is the rule of thirds: one third on engagement, one third after suitable candidates are presented, one third when the hire signs the contract. Fixed-date instalments are another option. Under pure contingency, you pay only when you hire someone.
Do you pay a retained search firm if no one is hired?
Yes, for the instalments due up to that point. Under the BDU principles, work not yet billed is paid if a project is cancelled. Agree in advance which instalment falls due at which stage, and whether a tail clause applies if you later hire someone presented. Under pure contingency, nothing is due without a hire.
Does the candidate pay the headhunter?
No. Under the BDU principles, the hiring company is the only client, and candidates are not asked for fees or placement charges. The same principles require the firm to give candidates a full and neutral picture of the company and the role.
What is a replacement guarantee in executive search?
A commitment to search again without a new search fee if the hire leaves early; expenses may still be charged. Under the BDU principles it usually covers probation, but not cases such as the role being cut, a changed remit or a relocation of the business. Put the period, the cases and the deadline for claiming it in writing.
How much does an interim executive cost per day?
The AIMP market study puts the average client day rate in Germany for 2025 at about €1,367 net, up from €1,338. That excludes travel and includes any provider margin. Interim managers surveyed across the DACH region billed an average of €1,307 themselves, excluding provider margin. Highly qualified profiles in finance or restructuring can command above-average rates.
Sources
- Bundesverband Deutscher Unternehmensberatungen BDU e. V. (2025, 27 August). Personalberatungsbranche in Deutschland: Marktteilnehmer prognostizieren leichten Umsatzrückgang auf 2,78 Milliarden Euro in 2025 [Press release on the survey “Facts & Figures zum Personalberatungsmarkt 2025”; in German]., BDU (2025). Press release, read on 17 Oct 2026. Cited for the average fee of 27.5% of target income in 2024 (28% the year before), the sample (almost 200 search firms working exclusively and mainly on a retained basis, surveyed in May/June 2025) and the 31% of placements in the €100,000–150,000 band. German market only; the full survey is not freely available to non-members.
- Bundesverband Deutscher Unternehmensberatungen BDU e. V. (2026, 17 April). Vorsichtige Trendwende im Personalberatungsmarkt: Branche erwartet moderates Wachstum für 2026 [Press release on the survey “Facts & Figures zum Personalberatungsmarkt 2026”; in German]., BDU (2026). Press release, read on 17 Oct 2026. Online survey of 120 search firms in March 2026. Cited only for fee levels and structures showing no fundamental change. It gives no new percentage.
- Bundesverband der Personalmanager (BPM) & Bundesverband Deutscher Unternehmensberatungen (BDU) (2019). Zusammenarbeit mit Personalberatungen: Gemeinsamer Leitfaden des BPM und des BDU zur Auswahl von Personalberatungen [Working with search firms: joint guide; in German]., BPM / BDU (2019). Read in full (April 2019 edition). Cited for the rule of thirds, a fee of around 30% of annual gross income as frequent, the four cost drivers, the definitions of compensation, the fee models with their pros and cons, expenses, guarantee, tail and off-limits clauses, and the data protection roles. Sample clauses are examples, not standards. Its estimate of the cost of a departure during probation is not used here because it is unsourced.
- Bundesverband Deutscher Unternehmensberatungen BDU e. V. (2025). Grundsätze ordnungsgemäßer und qualifizierter Personalberatung (GoPB): Qualitätsleitlinien für Personalberatungen im BDU e. V. Adopted 3 December 2024, version of February 2025 [Principles of proper executive search; in German]., BDU (2025). Read in full. Cited for the fee basis (expected effort or target income, not success alone), the first instalment on engagement, fee adjustment on profile changes and payment on cancellation, exclusivity, the written overview of the search method including AI tools, the replacement commitment during probation and its exceptions, and candidates paying no fees. Rules for BDU members, not law.
- Association of Executive Search and Leadership Consultants (AESC) (2025). AESC Professional Practice Standards., AESC (2025). Read in full (PDF of October 2025). Cited for engagement terms being in writing (scope, timing, fees and payment schedule, deliverables, guarantees, off-limits, conflicts, data management) and for AESC members working on a retained and exclusive basis in executive search. It contains no fee rates.
- Association of Interim Management Professionals (AIMP) (2026). AIMP-Marktstudie DACH 2026: Next Generation Interim Management. 21st AIMP market study of interim management [in German]., AIMP (2026). Read in full. Survey from March to May 2026 of clients (n = 119), providers (n = 19) and interim managers (n = 664). Cited for the average client day rate in Germany in 2025 (about €1,367 net, excluding travel, including provider margin where applicable; €1,338 the year before; reported by providers), the average rate billed by the surveyed interim managers across the DACH region (€1,307 net, excluding travel and provider margin, n = 544) and the spread in favour of finance and restructuring profiles. The study states that the interim managers surveyed are not representative of the whole market.
- Bidwell, M. (2011). Paying more to get less: The effects of external hiring versus internal mobility. Administrative Science Quarterly, 56(3), 369–407., SAGE (2011). Peer-reviewed study of personnel data from the US investment banking arm of a financial services company (2003–2009); bibliographic data and abstract checked via Crossref. Cited for promoted workers’ better performance in the first two years and lower exit rates, and for external hires’ initial pay premium of around 18%. No data on senior executives and nothing on search fees.
- Bürgerliches Gesetzbuch (BGB) [German Civil Code], § 622 Kündigungsfristen bei Arbeitsverhältnissen [Notice periods in employment relationships]., Bundesministerium der Justiz (2026). Wording read on 17 Oct 2026. Cited only for subsection 3: a shortened two-week notice period during an agreed probationary period of at most six months.