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 40% then the rate they’ll pay your firm will be $14/hr. If you play by these rules, 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 money for 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.
Do you think that buyers of staffing services be untrained to ask “what’s your markup” if staffing companies stopped playing along?