Temp-to-Hire Conversion Fee

Why this comes up

A temp-to-hire conversion fee usually follows a contract schedule, stepping down the longer the worker has been on assignment. But a contractually correct fee isn't automatically a good deal, this engine checks the scheduled fee against the economic value the assignment would otherwise continue generating, so you know whether converting now is actually favorable, not just contractually allowed.

How we calculated this

Schedule mode: Conversion Fee = tier fee applicable at elapsed time (percent of salary or flat)
Economic floor mode: Economic Value Lost = Remaining Weeks x Weekly Economic Contribution
Net Economic Impact = Conversion Fee - Economic Value Lost

Worked example: a fee schedule of 15% at week 0, 10% at week 13, 5% at week 26, on a $70,000 candidate salary, evaluated at week 16 (falls in the 10% tier), with 10 remaining weeks on the assignment worth $600/week.

Conversion Fee = 70,000 x 0.10 = $7,000
Economic Value Lost = 10 x 600 = $6,000
Net Economic Impact = 7,000 - 6,000 = $1,000 (favorable)

What this means

• The schedule mode and the economic floor mode are complementary, not exclusive: a contractually low late-stage fee can still be a bad deal if it's below the assignment's remaining economic value, and a contractually higher fee can still be favorable if it clears that floor comfortably.
• In the worked example, the conversion is favorable by $1,000, worth confirming before assuming any conversion at any fee is automatically a win.
• Use Conversion Timing / Fee Decay to see how this comparison changes week by week across the whole assignment, not just at one point in time.

Common mistakes

• Treating any conversion at the contractually scheduled fee as automatically a good outcome without checking it against the economic floor.
• Using a stale weekly economic contribution figure that doesn't reflect the assignment's actual current profitability.
• Forgetting that the fee schedule and the economic floor answer different questions, one is about what you're contractually owed, the other about what's actually the better financial outcome.

Frequently asked questions

Which mode should I use?

Both together, when you have the data, is most informative. Use schedule-only if you just need the contractual fee figure; economic-floor-only if you're evaluating a conversion where the fee is already fixed and you want to know if it's worth it.

What if the conversion fee is unfavorable?

That's useful information before agreeing to the conversion, not after; it may be worth negotiating a different fee or timing, or continuing the assignment as contract rather than converting now.

How does this relate to fee decay over time?

See Conversion Timing / Fee Decay for the full curve across the assignment's timeline, since both the fee and the economic floor change week to week.

Limitations

The economic floor uses the weekly contribution you enter as a constant; it doesn't project how that contribution might change over the remaining assignment.

Next decision

• See how this fee and its economic value change across the full conversion timeline

Learn more

Temp, Temp-to-Hire, and Direct-Hire Economics — three placement models with genuinely different economics.