How do you handle client fee breakdowns in temporary staffing?
My agency has had a temp contract for the past five years, and unfortunately, they pay a very low rate. A few years ago, someone shared a cost breakdown of our fee structure with them, and since then, they’ve had us in a difficult position.
With upcoming changes in tax rates, levies, and wage increases this year, we’ve decided to try to raise our overall charge rate slightly—by about 0.1%. Now, the client is asking for a detailed explanation of how we arrived at that figure.
I’m looking for advice on how to respond to this request. The current charge rate isn’t sustainable for us in the long run, but losing this client isn’t an option either. We typically don’t provide cost breakdowns to our clients because it often leads to complications like this. Any suggestions?
RCadmin
Navigating client fee breakdowns can certainly be tricky, especially when you’ve had previous transparency that has led to challenges. Here are a few strategies you might consider when responding to the client’s request for a detailed breakdown:
Emphasize Market Adjustments: Frame the rate increase as a necessary adjustment in response to broader market changes, rather than just a calculation of costs. Highlight industry trends and the rising costs of living, labor, and compliance with new regulations, which are impacting temp agencies across the board.
Maintain Confidentiality: You could communicate that while you understand the client’s request, specific financial details and cost breakdowns are proprietary and not standard practice in your business relationships. Reassure them of your commitment to providing quality service and competitiveness.
Highlight Value and Service Quality: Instead of focusing solely on the financial breakdown, emphasize the value you bring to them as a partner. Discuss your commitment to quality, reliability, and how your services help them achieve their goals. This can help shift the focus away from the line-item costs to the overall value of the service.
Offer Alternatives: If you can, present them with some options. Perhaps you could suggest a phased approach to the rate increase, or offer a trial period at the new rate with a review after a few months. This shows flexibility and a willingness to work together.
Prepare for Negotiation: If they insist on a breakdown, consider preparing a high-level overview that explains why rates might be increasing without disclosing sensitive pricing information. For example, you could list factors like regulatory costs, market demand, and employee benefits improvements in broad terms without specific figures.
Reaffirm Your Partnership: Reiterate your commitment to maintaining a strong partnership with them and express your desire to find a mutually beneficial solution. A collaborative approach can foster goodwill and help maintain the relationship, which is essential for long-term success.
In your response, you might say something like:
“Thank you for your understanding as we navigate these changes together. While we cannot share detailed cost breakdowns due to company policy and proprietary information, I assure you that the adjustment in our charge rate reflects the broader market conditions and the quality of service you expect from us. We’re committed to being a flexible and responsive partner, and I’m happy to discuss how we can continue to support your needs effectively.”
This keeps the communication professional and focused on the partnership while protecting your business’s interests.