Pay-per-applicant Guide: Leverage Application-on-demand to Save Hiring Cost

If you asked a recruiter ten years ago about pay per applicant, they would’ve been unaware of the term or the concept. But with human resources working to keep up with changing trends in technology, important concepts like pay per applicant are gaining a lot of prominence. Last year, the career search portal Indeed switched to the pay per applicant model, generating a lot of buzz and questions around the pricing model.

What is pay per applicant? How does pay per applicant work and why is it crucial for getting hiring results? Here’s everything you need to know about pay per applicant in our comprehensive guide.

What is pay per applicant?

Also known as Performance-based posting, pay per applicant is a business pricing model under which the employer only pays for posting an ad when applicants are delivered to them. Is this similar to cost per click? No! Unlike cost per click wherein the user must pay for whoever clicks on the ad, the pay per applicant model delays payment until the qualifaction (application submitted) is met. Thus, client’s only pay when they receive qualified applicants.

This model benefits recruiters by preventing wasted time sifting through applications Imagine a traditional online job board where a recruiter posts an ad for an available job opportunity and they receive a hundred qualified applicants. But there is a higher likelihood of the recruiter receiving a thousand unqualified or unsuitable job applicants – meaning a recruiter does not get their money’s worth when they pay to post an ad.

Instead of spending limited budgets and resources on sifting through the responses to a job post, a recruiter can simply switch to the pay per applicant model to make hiring more effective and efficient.

What are the advantages of the pay per applicant pricing model?

Save money while zeroing in on qualified candidates

The pay per applicant model allows recruiters and organizations to make the most out of their ads and get their money’s worth – as they only pay when qualified applicants are delivered to them.

Price is likely to fluctuate

Not all jobs are in demand at the same time. Depending upon the market conditions, the demand for a job position can vary. If the market is less competitive at the time of posting, the cost per application is likely to be on the lower end. Recruiters can keep this in mind while chalking out their hiring strategies.

Flexibility

Human resource teams enjoy flexibility in the pay per applicant pricing model. They can either choose to limit the number of qualified applications received or close a job once they have met their objective.

Swift filtering with set dealbreakers

Organizations can set up several prerequisites to filter out unsuitable candidates. For instance, organizations can ask applicants at the time of applying whether they have certain years of experience in a particular line of work or check if the candidate is authorised to work in a specific country. Setting up deal breaker questions in advance will allow the organization to filter out unsuitable candidates faster.

How can a pay per applicant pricing model be useful?

Points out gaps in hiring strategy

Before running a campaign, receivers and human resource teams at organizations are likely to chalk out a road map for the hiring process. Naturally, not all of the hiring strategies will pan out. By using a pay per applicant model, recruiters and organizations can identify gaps in their hiring strategies – what jobs are more in demand and are likely to receive a higher number of applications, thereby, don’t need to run for long; what jobs are likely to have a lower number of applicants and might require a bit more of pushing; what jobs need to be closed on priority etc.

Managing cost effectively

Using a pay per applicant pricing model gives recruiters and organizations a clear picture of the recruitment budget and allows them to take steps to avoid wasting budget. It also gives valuable and actionable insights on the cost of hire based on industry, location, job position etc – thereby allowing recruiters to better manage costs.

Trace the source of traffic

By using a pay per applicant system, an organization can determine the source of traffic that is giving them the highest quality of applicants. Let’s say a job as has best responses from LinkedIn and a lot of fake applicants from another social media site, recruiters can use that information to direct their ad spend toward LinkedIn and make the most of their campaign.

Getting started with pay per applicant

While building a campaign around the pay per hire pricing model, recruiters need to follow these steps to create and deliver a successful campaign.

Estimate the applicant cost

It is recommended to evaluate the average number of applicants likely to apply for an available job opportunity. Recruiters can further zero in on the average number of qualified applicants likely to be shortlisted from the overall list of applicants. The information derived will give the recruiter a general idea of the expenses for the campaign and thereby help them increase or decrease their budget.

Defining who qualifies as an ideal applicant

Recruiters and organizations can define candidate quality. This can be done by establishing specific parameters including level of work experience, training and skills requirement, educational qualifications, etc. Recruiters can also create straightforward qualifiers to further narrow down potential candidates.

Some questions to consider during this stage:

• What are the non-negotiables?
• Do candidates need any special certifications?
• Do they need to have a specific amount of experience using specific programs or software?

These qualifiers can be direct and can be deal breakers. For instance, recruiters can ask questions like, “Do you have a minimum of ten years of experience in teaching AP Calculus?” “Are you a certified Google Digital Marketer?” “Are you authorised to work in the United States?” etc. These questions can successfully filter through the number of applicants to help recruiters shortlist and zero in on qualified applicants.

Track your applicants

Installing an applicant tracking system to track the number of applications received can help recruiters with their hiring strategy. Applicant tracking systems will collate data in real time and provide insights on what is and isn’t working for an ad. Recruiters can use these insights to further fuel their hiring efforts or even revisit their hiring strategies.

Prioritize hiring efforts

Most job boards will allow recruiters to focus on key roles that need more attention. By prioritizing on specific job roles, recruiters can make the most of their hiring budget and achieve key objectives first.

Important points to keep in mind while running pay per applicant campaigns

• Budget for high and low-volume roles before running the campaign – this is not just limited to expenses but also to time and handling of responses.
• Since the initial pre-qualifying steps are now eliminated from the shortlisting process, it is important that recruiting teams stay prepared to deal with suitable, as well as unsuitable, candidates to maintain a positive hiring experience. This means teams must have rejection emails for unsuitable candidates prepared in advance.
• Have application initiation emails in place. Additionally, there should be criteria specified within the applicant tracking system to ensure that any candidates who just didn’t make the cut can be added to a community database for future open positions.

How much does pay per applicant cost?

The cost of using the pay per applicant pricing system is likely to be dependent on certain parameters. Let’s understand each of these parameters briefly.

Number of applications purchased

If a recruiter purchases a specific number of applications, they will only need to pay for those number of applications. Once that number is reached, the ad will stop showing.

Time of pausing the campaign

Recruiters can opt for a more flexible system where they can decide the number of qualified applicants they want as the campaign runs. They can then move to the next round of qualifiers. This allows recruiters to stop the campaign or pause the campaign at will. They will be billed at the stage where they paused the campaign and the number of leads generated in that time frame.

While campaign pricing will be affected by the number of leads generated, the rate per applicant is usually decided on the basis of other factors.

Demand for the job

If a job is in high demand and receives a high response rate, the number of qualified applicants will be higher and as such, a recruiter will not have to pay a lot of money for acquiring such candidates. In a nutshell, a larger talent pool will be available at a lower cost. Similarly, a job that is in low demand or requires a specific skill set might attract fewer responses and even fewer qualified candidates. Because the effort to find a suitable talent pool is higher, the price per applicant is also likely higher.

Location of the job

Location forms an important parameter factoring the cost of using a pay per applicant pricing model. The response to work in popular locations, for instance, the headquarters of an organization, is much higher, than say the response to work for a field office in a remote location. Depending on the location, the demand for a job is also likely to fluctuate and thereby affect the cost of the campaign.

Other pricing models to remember

Pay per click

Pay per click is the traditional way to pay for advertising on job boards. In this model, a recruiter or organization can advertise on a job board and pays when a user clicks on their ad. While this pricing model has worked for years, it has a certain number of disadvantages.

Difference between pay per applicant and pay per click

Pay per applicant	Pay per click
PPA or pay per application refers to organizations only paying for results – when the candidate takes a predetermined action, e.g., conversion.	In the PPC pricing model, websites bill organizations based on the number of times visitors click on a recruitment ad.
Involves the display of recruitment ads with pre-requisites or qualifiers. Organizations only need to pay for candidates that meet search criteria.	Essentially, this system, involves Job boards displaying a recruitment ad to a large number of job seekers. When candidates click the ad, they are directed to the company site, increasing the organisation’s official website traffic.
Guarantees conversions	Guarantees traffic but not conversions
Generates limited but relevant needs	Generates high traffic

Pay per hire

Pay per hire is another traditional pricing model under which recruiters or organizations only have to pay for the ad once they have closed the vacancy. This model is essentially based on a percentage of the annual salary of the candidate. Job boards will usually charge anywhere between 10% and 30% of the successful candidate’s annual salary as their placement fee.

Is pay per applicant pricing model for you?

Paying per applicant guarantees leads, offers valuable insights and eliminates unqualified candidates before they reach a recruiter. It essentially eliminates the first step of the shortlisting process that is often a bottleneck and can consume time and effort. Pay per applicant is a great way to work around tight budgets, focus on priority hires and continually improve hiring strategies.

FAQs

What does cost per application mean?

Cost per application refers to the cost incurred by a company for each job application received.

What is the cost per applicant?

Cost per applicant is the cost incurred by a company for each candidate who applies for a job.

What is applicants per hire?

Applicants per hire is the number of applicants it takes to fill a job opening.

How do you calculate applicants per hire?

To calculate applicants per hire, divide the number of applicants by the number of hires.

What is a good applicant-to-hire ratio?

A good applicant-to-hire ratio varies by industry, but a ratio of 10:1 or lower is generally considered favorable.

What is a typical cost per hire?

A typical cost per hire varies by industry, but it’s typically between $4,000 and $7,000.

What is an on demand application?

An on-demand application allows job seekers to apply for a job instantly through an online platform.

What is demand based recruiting?

Demand-based recruiting is the practice of recruiting based on current or anticipated business needs.

What are the benefits of talent on-demand?

The benefits of talent on-demand include cost savings, flexibility, access to specialized skills, and reduced time-to-hire.