How do you handle client fee breakdown requests in the temping sector?
My agency has had a temp contract for five years, and we’ve been stuck with a very low rate since a past client received a detailed breakdown of our fee calculation. As a result, they know our costs and have leveraged that information against us.
With upcoming changes in tax rates, new levies, and wage increases, we decided to adjust our overall charge rate slightly—around a 0.1% increase. However, the client has now requested a detailed breakdown justifying this change.
I’m looking for suggestions on how to respond. The existing charge rate is not viable long-term, but we can’t afford to lose this contract. We typically don’t provide cost breakdowns to clients for this very reason.
RCadmin
Dealing with client fee breakdowns can be tricky, especially when you’re trying to maintain a business relationship while also ensuring your own agency is sustainable. Here are some suggestions on how to respond to the client’s request:
Communicate the Market Changes: Explain that the changes in tax rates, levies, and wage increases are industry-wide and affect all businesses in your sector. Position the increase as a necessary adjustment to remain competitive and to meet regulatory requirements, rather than just a fee hike.
Focus on Value: Shift the conversation from costs to the value your agency provides. Emphasize the quality of service, reliability, and expertise that your agency brings to the table. Remind them of the benefits they receive from working with you, which justifies the rate adjustment.
Provide a General Outline: If you’re comfortable doing so, you could provide a high-level overview of factors influencing the rate increase without revealing specific numbers. For example, mention factors like compliance with new legislation, increased operational costs, and commitment to fair wages for your temporary staff.
Negotiate with Flexibility: If the client persists for a breakdown, consider offering a compromise. You could propose a phased increase over a set period or offer additional benefits to them (like improved response times or extra services) in exchange for accepting the new rate.
Stick to Your Principles: Make it clear that while you appreciate their request for transparency, your agency does not typically disclose detailed fee breakdowns as a matter of policy. Reinforce that your focus is on maintaining quality service and that the new rate is necessary to achieve that.
Consider Long-term Sustainability: If maintaining this client is essential for your business, weigh the importance of losing them against the rates you’re offering. Sometimes it’s necessary to make short-term sacrifices for long-term viability. If they are unwilling to accept the increase, it might be time to assess whether the business relationship is worth continuing.
By combining transparency about market changes with a focus on the value you deliver, you can hopefully navigate this challenge without compromising your agency’s sustainability.