How Much Does An IT Staffing Agency Owner Make? $120k Plus Profit
You’re building income before cash flow is stable, so owner pay has to be split between salary and profit This five-year planning case includes a $120,000 founder salary, EBITDA from -$239,000 in Year 1 to $965,000 in Year 5, and excludes personal taxes, debt service, and guaranteed distributions
Owner income$120kNet margin41.7%Revenue for target pay$288kBusiness difficultyHard
Want to test your owner pay?
Owner income calculator
Estimate owner take-home and target-pay gap for an IT staffing agency from revenue, margin, costs, reserves, and target pay.
!
Planning note: Research-based planning estimate only. Actual owner income depends on revenue, margins, payroll, taxes, reserves, and reinvestment. This is not guaranteed salary, tax advice, or owner distribution advice, and it excludes personal taxes unless you enter them.
What drives IT staffing owner income?
1
Contractors
$160/mo
At 160 hours a month, every extra contractor multiplies the spread, and that's why EBITDA can swing from -$239K in Year 1 to $965K in Year 5.
2
Rate Spread
$1/hr
Every extra $1/hour between bill rate and pay rate adds about $160 a month per contractor, before commissions and overhead.
3
Recruiter Capacity
0.5-3.0FTE
Senior recruiter capacity rises from 0.5 FTE to 3.0 FTE, so the founder can turn more openings into placements without doing every search.
4
Direct Hire
40%-52%
Permanent placements move from 40% to 52%, so more of the mix comes from higher-value fills instead of only contract hours.
5
Cash Lag
-$64K
The model bottoms out near negative $64K cash and does not breakeven until Month 39, so slow collections can block owner draws.
6
Overhead Load
$5.45K
Recruiter and sales commissions start at 10% and stay at 8% by Year 5, and the founder's $120K salary plus about $5.45K of monthly overhead keeps margin tight.
IT Staffing Agency owners make $120,000/year in founder salary in this model, but distributions are not safe during the first three years; for context, track this against What Is The Most Important Measure Of Success For Your IT Staffing Agency?. EBITDA, meaning profit before interest, taxes, depreciation, and amortization, is -$239,000 in Year 1, -$350,000 in Year 2, and -$202,000 in Year 3.
Early Owner Pay
Founder salary: $120,000/year
Year 1 EBITDA: -$239,000
Year 2 EBITDA: -$350,000
Year 3 EBITDA: -$202,000
Upside Case
Breakeven starts after Month 39
Year 4 EBITDA: $286,000
Year 5 EBITDA: $965,000
Role drives pay: sell, recruit, or manage
How much revenue does an IT staffing agency need to pay the owner?
There isn’t a fixed revenue threshold for an IT Staffing Agency; the real test is whether gross profit covers COGS, commissions, marketing, recruiter payroll, admin payroll, and reserves. This model already carries a $120,000 owner salary, $65,400 in annual fixed overhead, and wage expense rising from $247,500 in Year 1 to $820,000 in Year 5. If the owner wants $250,000 total pay, the extra $130,000 has to come from distributable profit after cash needs.
Cost coverage first
$120,000 owner salary is built in
$65,400 fixed overhead is annual
Year 1 wage expense is $247,500
Year 5 wage expense is $820,000
Owner pay math
$250,000 total pay target
$130,000 above salary alone
That gap needs distributable profit
Profit must stay after cash reserves
How does IT staffing agency gross margin affect owner income?
In an IT Staffing Agency, gross margin sets the ceiling for owner income, but net profit and owner distributions decide what you can actually take home. Here’s the quick math: at $15/hour and 160 hours, that’s $2,400 per active contractor per month before listed COGS and overhead; by Year 5, $18/hour at 165 hours is $2,970. If you want the launch-cost side of the model, see How Much Does It Cost To Open And Launch Your IT Staffing Agency?Payroll taxes, benefits, insurance, vendor fees, and collections timing can erase paper margin fast.
Gross margin math
$15 x 160 hours = $2,400
$18 x 165 hours = $2,970
$1 spread change adds $160
Gross margin is not owner pay
What cuts take-home
Payroll taxes hit each placement
Benefits and insurance add cost
Vendor fees reduce contribution
Collections timing can slow cash
Key Takeaways
More active contractors lift recurring gross profit.
Spread gains matter only if collections stay tight.
Direct-hire adds profit, but it is less recurring.
Cash reserves protect owner pay before EBITDA turns positive.
Compare lean, base, and high owner-income scenarios for planning
Owner income scenarios
Owner income shifts with ramp speed, EBITDA, and how much cash stays in the business. Early years support salary only; later years may allow distributions after reserves.
Compare founder pay in lean, base, and high cases.
Scenario
Low CasePlanning estimate
Base CasePlanning estimate
High CaseUpside estimate
Launch model
Owner income stays at the lean end while the firm ramps.
Owner income reaches a modeled middle case with salary plus possible distribution after reserves.
Owner income improves in the stronger upside case as EBITDA expands.
Typical setup
The agency is still in early ramp, founder-led, with a $120,000 salary, no planned distribution, and EBITDA negative through Year 3.
The business has reached breakeven in Month 39 and is operating around Year 4 with $286,000 EBITDA, a $120,000 marketing budget, and a $1,700 CAC.
The business is in Year 5 scale-up mode with $965,000 EBITDA, a $150,000 marketing budget, and a $1,500 CAC, which leaves room for salary plus a larger owner distribution.
Cost drivers
Negative EBITDA through Year 3
$25,000 Year 1 marketing budget
$2,500 CAC
no planned distribution
founder salary only
Year 4 EBITDA $286,000
breakeven in Month 39
$120,000 marketing budget
$1,700 CAC
salary plus possible distribution
Year 5 EBITDA $965,000
$150,000 marketing budget
$1,500 CAC
stronger scale
salary plus EBITDA share
Owner income rangeBefore owner reserves
$120,000 salary onlySalary only
$120,000 plus distributionBalanced case
$120,000 plus larger distributionUpside case
Best fit
Use this for a funded startup phase and to stress-test cash burn before distributions.
Use this as the standard planning case for a stable operating year after breakeven.
Use this to test what owner income could look like if growth stays strong and reserves are covered.
!
Planning note: Scenario figures are researched planning assumptions, not guaranteed earnings, salary promises, tax advice, or distributions.
IT Staffing Agency Core Six Income Drivers
Active Contractor Headcount
Active Contractor Headcount
When more contractors stay on billing, the agency earns recurring gross profit, but only if their hours hold steady. In this model, one active contractor at 160 hours/month in Year 1 brings in $2,400/month; by Year 5, 165 hours/month equals $2,970/month before COGS (direct costs) and overhead. The owner only sees higher pay if that added gross profit covers payroll, recruiting, and support.
Here’s the catch: bench time, client cancellation, contractor churn, and slow collections can wipe out the gain fast. If a contractor is not billing, revenue drops while fixed costs still run. So headcount helps income only when billed hours stay high and cash comes in on time.
Track active billers, not resumes
Measure contractors by billed hours, not pipeline size. Track start date, weekly hours, client end date, and days on bench so you can forecast monthly gross profit from active headcount. One billable contractor is worth $2,400/month in Year 1 and $2,970/month in Year 5 in this model, so every lost billing seat matters.
Keep a simple rule: add contractors only when expected gross profit covers recruiting, payroll, and support. If collections slow or churn rises, pause adds and protect cash. That keeps owner draws tied to real billed work, not paper headcount.
Bill Rate To Pay Rate Spread
Bill Rate to Pay Rate Spread
If your bill rate barely clears contractor pay and burden, the agency only makes money on volume. The spread is the hourly gap after pay rate, payroll taxes, benefits, workers compensation, vendor fees, and other employer burden—and that gap is what funds commissions, overhead, and owner pay.
Bill rate per hour
Pay rate per hour
Payroll taxes and benefits
Workers compensation and vendor fees
Hours billed and collections timing
At 160 hours, a $1/hour wider spread adds $160 per contractor per month, or $1,920 a year. The source shows contract staffing at $15/hour in Year 1 and $18/hour in Year 5, but it does not split bill rate from pay rate, so the real profit line depends on the actual spread after direct labor costs and slow cash collection.
Measure Gross Spread Every Month
Track spread by client, role, and contractor, not just company-wide. Use bill rate, pay rate, and all labor burden to calculate gross spread before commissions and overhead. If one role is thin, raise price, lower pay, or walk away; a busy desk with weak spread can still reduce owner income.
Watch hours billed, collections days, and bench time. A strong spread still hurts cash if invoices are slow or contractors sit idle. The owner’s take-home improves when spread growth beats commission cost and fixed overhead, not when headcount rises by itself.
Recruiter Productivity And Fill Rate
Recruiter Productivity
Fill rate is the share of job orders that turn into starts. Owner income improves when recruiters move more orders through submissions, interviews, and placements without bloating commission cost. In this model, recruiting and sales capacity grows from Head of Recruitment plus 05 Senior Recruiter in Year 1 to Head of Recruitment, 3 Senior Recruiters, Sales Manager, and 2 Business Development Representatives in Year 5, so weak conversion quickly turns payroll into a fixed drag.
Commissions drop from 10% to 8%, which helps margin only if starts rise faster than headcount. Here’s the quick math: more recruiters do not raise owner pay unless each one produces enough submissions, interviews, starts, and placements to cover wages, commissions, and support cost. Low fill rate hurts cash flow first, then profit.
Track Funnel Conversion
Measure the full funnel by recruiter: job orders, submissions, interviews, starts, and placements. If starts lag while the team grows, the agency is buying fixed cost instead of revenue. Tie pay and forecasts to starts per recruiter, not just activity, so the owner can see which desk creates income and which desk only adds payroll.
Watch starts per recruiter each month.
Compare fill rate by client and role.
Cut spend when commissions outrun starts.
If fill rate stays low, the Year 5 team structure adds cost faster than profit, even with commissions down to 8%. Push managers to close the loop from submission to start, because owner income depends on conversion quality, not just recruiter count.
Payroll Funding And Collections Timing
Cash Timing Drives Owner Pay
Profit and cash for owner pay are not the same. In IT staffing, contractors often get paid before clients settle invoices, so the real driver is cash timing, not just margin. This model shows a minimum cash of -$64,000 and breakeven in Month 39, even though Year 4 EBITDA turns positive at $286,000.
Model payroll dates, accounts receivable terms, and any line of credit. Slow collections can block owner draws even when gross profit looks strong. If funding costs are missed, the model will overstate cash left for distributions and understate the strain on working capital.
Protect Cash Before Paying Yourself
Track days to pay contractors, days to collect, and the monthly cash gap. If clients pay on 30- to 60-day terms, keep enough reserve or credit to cover payroll and taxes. Enter line-of-credit interest as a real cost, because it lowers the cash available for owner pay.
Use a simple rule: pay yourself only after payroll, tax, and AR needs are covered. If collections slip, cut draws first, not recruiting spend. One late client can freeze distributions, even when gross profit is healthy.
Direct-Hire Placement Volume And Fee Percentage
Direct-Hire Placement Fees
Direct-hire income is a one-time fee on each permanent placement, so it can lift margin fast because there is no ongoing contractor payroll. The key formula is placements × candidate salary × fee percentage. In this model, the source shows permanent placement price assumptions of $200 to $220 and billable activity of 10 to 12, but it does not provide salary or fee percentage, so those must be set before you can forecast owner income.
This driver is less recurring than contract staffing, so cash can swing when starts slip or offers fall through. Guarantee refunds, delayed start dates, and canceled offers can cut fee revenue after the search work is already done. Contract-to-hire should be tracked separately, because it blends placement revenue with later conversion risk and does not behave like pure direct hire.
Track Fee Yield And Fall-Throughs
Watch placements closed, average first-year salary, fee percentage, and refund rate on every deal. Here’s the quick math: higher placement volume only helps if the fee holds and the candidate starts. If one lost offer wipes out a fee, owner draw drops even when recruiter activity looks strong.
To improve this driver, tighten offer control and document guarantee terms by client. Measure billed placements against submitted candidates, then compare that to starts and refunds. One clean one-liner: more starts, fewer fall-throughs, better take-home pay.
Overhead, Commissions, And Owner Role
Overhead, Commissions, and Founder Labor
Fixed overhead of $5,450/month or $65,400/year sets the profit floor before the owner takes extra cash. In this model, wage expense climbs from $247,500 in Year 1 to $820,000 in Year 5, while recruiter and sales commissions run 10% in Year 1 and ease to 8% by Year 5. That mix can swallow margin fast if billings do not scale.
If the owner personally sells or recruits, early overhead can stay lower, but only by replacing paid capacity with founder time. The inputs that matter are recruiter count, sales count, commission rate, and wage load. Owner pay comes from what is left after real operating costs, not from tax-driven perks that do not fund payroll or distributions.
Keep Fixed Costs Tied to Billings
Track monthly overhead, payroll, and commissions against placements and start dates. A simple test is: does each added recruiter or salesperson cover their wage plus 8% to 10% commission? If not, they are a fixed drag, not growth. That is the cleanest way to protect owner income in an IT staffing firm.
Use a staffing P&L that separates real operating costs from owner-only perks. Forecast the jump from $247,500 to $820,000 in wage expense early, so you know when founder-led selling stops working and paid capacity must take over. Otherwise, profit looks fine on paper but cash for the owner stays tight.
