Fixed Markup
Thursday, March 1, 2007
As a way of controlling bill rates, a client company may negotiate a fixed markup percentage for the agency to be applied to the pay rate. This may be based on any number of factors including skill type, geography, competitive solicitation, etc. This approach has the billing rate going higher as the pay rate rises, which increases the agency's margin in real dollars. The principal drawback to this approach is the agency does not have any incentive to locate and place candidates at the lowest, competitive pay rates since they apply the agreed upon markup percentage to the pay rate.This illustrates a need to understand and monitor the pay rates. A drawback of the markup approach, if not managed appropriately, is the loss of the most qualified talent since the staffing agencies may be inclined to place their most qualified individuals with customers with the highest markups. Therefore you can see the importance of competitive pay rates to attract the most qualified talent and competitive markups to insure the placement of the qualified talent with your company.
The People Ticker allows users to make decisions in these matters by providing them with the most current market knowledge available today. Take a look at this sample market report.