What Indeed’s new pricing model means for recruiters

Indeed, one of the biggest job sites in the world, recently announced changes that could fundamentally change the way some companies approach hiring.

The company announced in October 2022 that it would start charging employers each time a candidate starts or submits a job application, rather than each time they click on a job posting. While per-application fees may be higher than per-click fees, Indeed says the new model will make the hiring process more efficient.

The transition from a pay-per-click to a pay-per-application pricing model, which was first rolled out among smaller employers, initially threw some businesses for a loop, as it resulted in higher than expected charges, and additional legwork on the side of hiring managers, according to the Wall Street Journal.

Raj Mukherjee, Indeed’s EVP and GM of employer product, admits the company is still ironing out kinks in the system. He told HR Brew he’s confident, however, that the pay-per-application model—or “pay for results,” as the company calls it—will deliver more value to HR and talent acquisition professionals in the long run.

Why Indeed is changing its pricing model. Mukherjee said Indeed’s new system is intended to make hiring smoother in a labor market that remains historically tight. While US job openings have slowed from an all-time peak last year, available jobs still outnumbered unemployed Americans by a factor of more than 1.5 as of March 2023.

Today’s recruiting tools don’t make hiring easy, Mukherjee said. And while Indeed has long operated under a pay-per-click system, the company has heard from clients in recent years who want the job site to get them “closer to the hire,” according to Mukherjee.

Employers using the pay-per-application model won’t receive as many applications for open roles, Mukherjee explained, citing Indeed data that finds US employers using the new system receive 35% fewer applications compared to those using pay-per-click. Ideally, this smaller pool of applicants will be a better fit for the job, as a hiring manager has to review the candidate within 72 hours before paying for the application. Over time, Mukherjee said, Indeed’s system will learn more about an employer’s preferences, and send candidates that are a better fit—a process he calls “matching.”

The company made some changes in response to concerns from customers who saw surprise charges in the fall. Rather than migrating all accounts to pay-per-application right away, Indeed has kept both options open for now. US customers can now compare pricing side by side and choose between the two systems. Additionally, Indeed put a $1,000 price cap on each job posting if employers using pay-per-application don’t set it themselves.

A slight majority (52%) of employers surveyed by Indeed in February said they preferred the new model.

“We understand that not everyone is going to be happy or excited about these changes,” Mukherjee said. “It takes time both to educate the market, and to learn from the feedback and improve our experience…but we are seeing many clients be really, really happy with this new change.”

How this will affect employers’ recruiting strategy. Steven Rothberg, the founder of College Recruiter, a job site for college and university students, told HR Brew he believes the new pricing model will force employers to be more “metric-driven,” given they’re paying higher fees for each job application.

“You’re gonna see those hiring managers demanding of the HR people that those applications actually are worthwhile,” he said, given they won’t want “to spend money on something that doesn’t happen.”

Rothberg added that he expects to see more employers invest in recruitment marketing going forward as a result of this new system, to ensure quality candidates apply for their jobs.

At the same time, “There are going to be employers, for one reason or another, who are just never going to want to buy pay-per-application,” he said.

Kara Baskett, the co-founder and CEO of Monumental Talent, a professional search firm, said she pulled back on Indeed spending due to the new pricing model. Many of the employers she works with are small businesses with tight margins and high turnover. From a cost-per-hire basis, paying per application doesn’t often make sense, she said.

“If there is an hourly worker that’s only going out one day to work for eight hours, that doesn’t really make sense to spend potentially $25 for that application” because they’re likely not turning a profit that amounts to much more than that for the company, she said.

The good news for employers who don’t want to transition to a pay-per-application model, said Rothberg, is there are plenty of other job boards in the market—tens of thousands in the US alone, he estimated.

“Indeed is great for the vast majority of jobs and employers, but it’s not the only option,” he said.