Actalent vs. Aerotek vs. Kelly Engineering vs. Randstad: Bill Rate Markups & Temp-to-Perm Buyout Fees

01The short answer: compare markup, conversion terms and fees, not the agency name

Actalent, Aerotek, Kelly Engineering and Randstad Engineering all place contract engineers under the same basic structure. You pay a bill rate. The engineer receives a pay rate. The difference, the markup, covers payroll taxes, insurance, benefits, recruiting cost and the agency's margin. Actalent is reported to be part of Allegis Group; the brands differ in focus and reach, but the commercial levers you can negotiate are the same with each.

Four numbers decide what a contractor really costs you:

• Markup on pay. Typical 2025-2026 engineering markups run 45% to 62%, with an observed range of 42% to 65%.
• Conversion fee. Hiring the contractor before a set number of billed hours commonly costs 20% to 25% of annual base salary.
• Direct-hire fee. Permanent placements commonly run 20% to 28% of first-year salary.
• Program fees. If you buy through a managed service provider (MSP) or vendor management system (VMS), expect 2% to 3.5% on top.

Engineer Aid is independent of every agency named here. We do not place staff; we benchmark the rate card and contract you already have or are about to sign.

02How markup turns pay into a bill rate

The formula is Bill rate = Pay rate x (1 + Markup). Annual cost uses 2,080 hours, a full-time year. Note that markup and margin are different numbers: a 52% markup on pay is a 34.2% gross margin on the bill rate (0.52 / 1.52). Agencies sometimes quote one and buyers hear the other, so always ask which.

Across the observed range, base pay of $48 to $85 an hour produces bill rates of roughly $72 to $135. Moving from 52% to 42% on one $60 engineer saves $6.00 an hour, $12,480 a year. On a ten-person team that is $124,800 a year, from one negotiated number.

03What the markup must cover, and what is margin

Part of every markup is real cost the agency carries as the employer of record. Employer FICA alone is 7.65% of pay, plus federal and state unemployment insurance, workers compensation, general and professional liability coverage and any benefits the agency offers contractors. Buyers commonly see total burden in the range of 18% to 30% of pay, depending on state, benefits and the risk class of the work.

Whatever sits above the burden is recruiting cost and margin. That is the negotiable part. Ask each agency to show its markup split into burden and margin for your roles. Many will not give exact figures, but the conversation tells you how much room there is.

Factors that legitimately push markup up:

• ITAR-cleared or US-person-only roles, where the candidate pool is small;
• on-site lab or plant floor work with higher workers compensation rates;
• short assignments, where recruiting cost is spread over fewer hours;
• agencies providing benefits such as paid time off and health cover to contractors.

Factors that should push it down: volume across many contractors, long assignments, candidates you referred yourself (payrolling), and an exclusive or preferred-supplier position.

04Temp-to-perm buyout fees: when to convert

Most engineering staffing contracts charge a conversion fee if you hire the contractor directly before a threshold, commonly 520 to 1,040 billed hours (about three to six months). Worked example: a contractor at $60 an hour has an annualized base of $60 x 2,080 = $124,800. At a 22% fee, converting at 520 hours costs $27,456.

Compare that with waiting until 1,040 hours, when many contracts drop the fee to zero. The extra 520 hours at a 52% markup cost you 520 x ($91.20 - $60.00) = $16,224 in markup over pay. Waiting is $11,232 cheaper than converting early, and you still get the hire.

The step-down above is a structure to request, not any agency's standard terms. Some contracts have a flat fee with no step-down until the threshold; that is the clause to negotiate first.

05Comparing four agencies on the same request

Agencies differ in which regions, industries and clearances they recruit for well, and that changes how fast you get qualified candidates. Buyers report that fill speed and candidate quality vary more by local branch and recruiter than by brand. Price, however, can be compared on paper. Send each agency the same written request:

1. The role, required skills, location, clearance and expected duration.
2. A request for pay rate and bill rate separately, plus markup as a percentage of pay.
3. Their conversion schedule by billed hours, and their direct-hire fee.
4. Overtime billing: is overtime billed at 1.5 times the full bill rate, or 1.5 times pay plus the normal markup in dollars? The second is cheaper.
5. Any MSP, VMS or program fees.
6. Replacement guarantee if a contractor leaves in the first weeks.

Then compare bill rate at the same pay rate. A lower bill rate with a worse conversion clause can be the more expensive offer if you expect to hire.

06MSP, VMS and overtime: the costs outside the bill rate

Large buyers often route all contingent labor through an MSP, a firm that manages suppliers for you, using a VMS, the software that handles requisitions and timesheets. The program fee is commonly 2% to 3.5% of spend. On our $91.20 example a 3% fee adds $2.74 an hour, $5,691 a year per contractor. Ask whether the fee is funded by the agency (deducted from its rate) or by you (added to the rate). Many buyers assume the first and pay the second.

Overtime terms matter for test, commissioning and launch work, where 10 overtime hours a week over a year (520 hours) at a $15.60 difference is $8,112 per contractor.

07Eight MSA clauses to redline before you sign

The master services agreement (MSA), the umbrella contract that every work order sits under, is where most of the cost outside the bill rate is fixed. Read it with the rate card side by side. These are the clauses buyers most often wish they had changed:

1. Markup cap. State the maximum markup on pay for each role family, so a new requisition cannot arrive at a higher percentage.
2. Pay-rate disclosure. Require the pay rate on every work order and invoice, so markup can be checked.
3. Rate changes. Pay raises pass through at the same markup in dollars, not as a fresh percentage on the new rate, unless agreed in writing.
4. Conversion schedule. A step-down by billed hours, reaching zero by 1,040 hours or earlier.
5. Conversion scope. The fee applies only to candidates the agency presented in the last 6 to 12 months, not forever.
6. Overtime basis. Overtime billed as 1.5 times pay plus the normal dollar markup.
7. Replacement guarantee. A free replacement or credit if a contractor leaves or is released in the first two to four weeks.
8. IP and confidentiality. Work product and inventions assigned to you, with the agency responsible for its contractors' signed agreements.

The RFP and MSA scope builder turns this list into redline text for your agreement.

08When staffing is the right model, and when it is not

Contract staffing is usually the right choice for on-site roles: test lab engineers, plant controls and PLC support, ITAR-cleared hardware work where data cannot leave a US facility. It is often the wrong choice for drafting, detailing and modeling work that can be delivered remotely to a specification, where a dedicated offshore bureau at $14 to $26 an hour or a fixed-price firm may cost far less.

Run all four delivery models side by side in the staffing vs. outsourcing TCO calculator, and see the offshore CAD bureau comparison for the other side of the ledger. If you already hold an Actalent agreement, the Actalent MSA and buyout fee audit lists the clauses to check line by line.

09Run the numbers: engineering staffing agency vs. CAD/FEA outsourcing TCO calculator

The same benchmarks as this sheet, with your inputs. Share link and printable brief open the full calculator page.