When is temp-to-hire conversion free?

When the worker has logged enough hours to pass the waiver threshold in your agreement. Thresholds commonly start around 520 hours of full-time work. Past that point conversion carries no fee, and every further week on the bill rate is pure premium over your payroll cost.

What does a direct placement fee cost?

Published ranges run 15% to 25% of first-year salary, with 20% the common benchmark. On a $65,000 role that is $13,000, which the calculator adds to salary plus burden on the direct placement path.

Should I always ride to the waiver to avoid the buyout?

No. Riding to the waiver means paying the bill-rate premium for every remaining hour. When that premium exceeds the fee decline per hour, converting now and paying the reduced buyout costs less, and the breakeven read shows the comparison in dollars.

What burden percentage should I use on the payroll paths?

The 30% default tracks the BLS finding that benefits run 30.1% of total compensation in private industry on the March 2026 release. Use your own loaded figure if you know it. The outputs are planning figures. General information, not legal or tax advice.

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Temp-to-Hire Breakeven Calculator

Fill one role three ways and see the first-year cost of each: hire direct, run a temp-to-hire trial and convert, or pay a direct placement fee. The calculator prices the trial, the declining buyout, and the waiver, then tells you whether converting now beats riding the bill rate to the fee waiver.

The role and your agreement terms

Enter the role, then the terms from your staffing agreement. Every fee and threshold is editable because agreements differ.

Annual salary of the role

$/yr

Temp hourly pay rate

$/hr

Hours per week

hrs

Trial weeks before conversion

wks

The weeks you pay the agency bill rate before moving the worker to your payroll.

Hours already worked on the assignment

hrs

Most buyout fees decline with hours worked and are waived past the contract threshold.

Rates and fees

Agency markup on the pay rateSurvey range 25% to 75% (2025 industry data)

Employer burden on salaryPrivate-industry benefits run 30.1% of total compensation (BLS ECEC, March 2026)

Buyout fee, % of first-year salarySurvey range 10% to 25%, declining with hours worked

Fee waived at this many hoursCommon thresholds run about 520 to 1,000 or more hours

hrs

Direct placement fee, % of salary15% to 25% published range, 20% benchmark

What the right path is worth

Direct hire

Temp-to-hire

Direct placement

Buyout owed today

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Breakeven and waiver read

Temp-to-hire is not always cheapest. When the buyout is high and the trial is short, direct placement or a straight direct hire can win, and the table above will say so. The model prices the first year only and leaves out what it cannot know: recruiting effort on the direct-hire path, ramp time, the cost of a wrong hire, and the co-employment exposure of long temp assignments. The buyout is modeled as declining straight-line to zero at the waiver. General information, not legal or tax advice.

Decide across ten open roles, not one

The paid Excel workbook adds a role portfolio view, a buyout schedule that also models flat-until-waiver fees, and a sourced assumptions tab.

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Direct hire, temp-to-hire, or direct placement

Every staffed role reaches the same fork. You can hire directly and carry salary plus burden from day one. You can run a temp-to-hire trial, paying the agency bill rate for the trial weeks and then converting, with a buyout fee if you convert before the waiver threshold. Or you can pay a direct placement fee, typically 15% to 25% of first-year salary with 20% as the published benchmark, and put the person straight on payroll. Each path prices the same first year differently, and the cheapest one depends on your terms, not on a rule of thumb.

How the buyout math works

Most staffing agreements price conversion as a percentage of first-year salary, in the published 10% to 25% range, and reduce the fee as the worker logs hours on the assignment. Common waiver thresholds run from about 520 hours, roughly thirteen weeks of full-time work, to 1,000 hours or more. This calculator models the fee declining straight-line to zero at your waiver threshold, so hours already worked reduce what you owe today. The paid workbook also models agreements where the fee holds flat until the waiver.

The breakeven question the tool answers

While a worker is on the bill rate, you pay an hourly premium over what the same person would cost on your loaded payroll. While the fee is declining, every hour worked also burns down the buyout. The breakeven read compares the two: when the hourly premium is larger than the fee decline per hour, converting now and paying the remaining buyout is the cheaper move; when the fee declines faster than the premium accrues, riding to the waiver wins. The read states which side your numbers land on and by how much.

What sits outside the model

The comparison prices the first year of one role. It does not price the recruiting effort a direct hire takes, the risk that a wrong hire costs far more than any fee, or the classification and co-employment questions long assignments raise. Treat the output as the financial baseline that disciplines the negotiation, not the whole decision.

When is temp-to-hire conversion free?: When the worker has logged enough hours to pass the waiver threshold in your agreement. Thresholds commonly start around 520 hours of full-time work. Past that point conversion carries no fee, and every further week on the bill rate is pure premium over your payroll cost.
What does a direct placement fee cost?: Published ranges run 15% to 25% of first-year salary, with 20% the common benchmark. On a $65,000 role that is $13,000, which the calculator adds to salary plus burden on the direct placement path.
Should I always ride to the waiver to avoid the buyout?: No. Riding to the waiver means paying the bill-rate premium for every remaining hour. When that premium exceeds the fee decline per hour, converting now and paying the reduced buyout costs less, and the breakeven read shows the comparison in dollars.
What burden percentage should I use on the payroll paths?: The 30% default tracks the BLS finding that benefits run 30.1% of total compensation in private industry on the March 2026 release. Use your own loaded figure if you know it. The outputs are planning figures. General information, not legal or tax advice.

Markup, fee, waiver, and burden terms vary by agreement, state, and role, so read your staffing agreement and confirm your own numbers before acting on the comparison. The defaults are sourced planning figures, current to the July 2026 review. General information, not legal or tax advice.