outplacement pricing

The “outplacement pricing” is a common tactic among the outplacement firms. They would typically offer one price for the initial 60 days of the service, and then gradually increase that price depending on your job market and current financial conditions, until you end up being on the hook to pay hundreds of dollars per month after 6-12 months.

This is an illegal practice by all means, but it can take as much as 3-6 months before you realize that this is not how things are supposed to be done. Longer if the outplacement firm is good at disguising the true costs, or if it is outplacement company that was founded and operated by your previous employer on the side (see examples).

You should also be aware that most of these outplacement services will not provide any meaningful service to you even if you pay them, since they are fundamentally different from professional recruiting firms. Most outplacement services will come to you with a list of companies that they have negotiated special deals with. Typical outplacement service is basically selling such lists to its customers under the guise of providing employment services.

For example: An outplacement company might offer you one year of service for $3,000, assuming you saved $2,000 in your previous employment with another company. But that $2,000 might come from the list of companies the outplacement firm “negotiated” with your last employer. And quite often those lists are quite dated and no longer relevant (and certainly not something you can put in your resume).

This is a real problem, since a large group of outplacement companies makes more money from selling their lists than from actually providing any jobs to their customers. And you will usually realize this only after you start paying for the service.

An alternative is to hire a professional recruiter before you decide to use an outplacement service. A good recruiter would provide a 6 months or 1 year contract with the initial outplacement pricing and other standard benefits (such as instructional workshops, job board access, resume review, etc.);

This would make a lot more sense for you, since instead of paying $10,000 to $20,000 for a 6 to 12 month service, you would pay only around $5,000 or less.

The professional recruiter will also be able to provide you with meaningful recommendations and advice throughout the entire job search process and advise you at what point do you need to switch from full-service outplacement company (which is traditionally more expensive) to an online job search solution.

For those who are really serious about their job search and are willing to put in some hard work, they can try to recruit clients with all their outplacement services. This approach is not very common among outplacement companies but it has great potential if you are actually able hand-pick a decent bunch of companies to add on your list (in terms of industry and company size).

An example how this strategy works is that I have used outplacement service offers me $3,000 at the beginning. I then contact a few companies and ask them to add me on their list. After a month, the outplacement company’s price increased to $5,000. At this point I knew that the outplacement firm is not going to be able to provide me much better service than the recruiter for half the cost. I switched from the outplacement firm back to the recruiter and saved another $4,000 dollars within one year (on top of saving $2,000 in my previous job).