In previous posts I’ve mentioned that before starting Mamu Media, I spent about eight years as the head of sales for a regional staffing agency that specialized in temporary clerical and administrative staffing. Those eight years shaped many of my business ideas and philosophies and taught me a great deal about the unique challenges of the staffing industry—and today I bring that knowledge and experience to Mamu Media’s branded publishing.
Here’s one of the most important lessons I learned during that time: if you want to win new business (or retain your current business) in the temporary staffing industry, don’t ever—ever—share your pricing in terms of a markup.
Most buyers of staffing services are accustomed to buying based on a markup. They tell you they want you to pay your employee $10/hr. If you tell them you have a markup of 50% then the rate they’ll pay your firm will be $15/hr. Congratulations: you’ve just officially declared your service a commodity and will lose business to a competitor whose markup is lower than yours.
Think about how ridiculous it is to buy or sell services based on a markup (i.e., the seller’s profit). When you go into a Starbucks, do you ask the staff how much the shareholders will profit from your cup of joe? Of course not. You gladly hand over your $3 because you know that in return you’ll get some of the best coffee in town. Over the years, Starbucks has built its reputation as a company with products and services that consistently outperform those of its competition. And for that reason, Starbucks customers rarely question the price tag of their caffeine.
Take that lesson to heart when discussing your pricing with current and potential clients. Rather than justify your price in terms of markup, focus your efforts instead in developing and delivering a service that warrants your desired price. If you take the time to sell the value of your services and work hard to separate your firm from the competition, you’ll be able to negotiate a set bill rate and maintain your right to choose the appropriate pay rate for your employees.