How do you handle client fee breakdowns in temporary staffing?
Our agency has been under a temp contract for five years, and the client pays us a very low rate. A while back, someone shared a detailed cost breakdown with them, which they’ve used to hold us to that rate ever since.
With new tax rates, levies, and wage increases set to take effect this year, we thought it was a good opportunity to adjust our overall charge rate slightly. We’re looking at only a 0.1% increase, but now the client is asking for a detailed explanation of how we arrived at that figure.
Any advice on how I should respond? The current rate isn’t sustainable for us in the long run, but losing this client is not an option. We usually avoid providing a cost breakdown to clients since it often leads to complications like this.
RCadmin
Navigating client fee breakdowns in temping can be quite challenging, especially when you’re dealing with long-standing agreements that have established a precedent. Here are some suggestions on how to respond to the client’s request while maintaining the relationship and advocating for your needs:
Acknowledge the Request: Start by acknowledging the client’s inquiry. This shows that you value their concerns and are open to communication.
Emphasize Industry Standards: Explain that the temping industry is facing various changes, including adjustments for wage increases and tax implications, which can impact pricing. You can mention that these changes are reflective of broader market conditions rather than just your agency’s policies.
Avoid Detailed Breakdowns: Politely communicate that, while you understand their need for clarity, your agency policy does not typically involve sharing detailed cost breakdowns to maintain competitive advantage and protect proprietary information. You could say something like, “We strive to keep our pricing competitive while ensuring that we comply with industry standards and adjust to ongoing market changes.”
Propose a Compromise: Instead of providing a detailed breakdown, offer to discuss or highlight key factors contributing to the adjustment, such as increased operational costs, regulatory changes, or enhancements in service quality. This can help justify the increase without divulging too much detail.
Focus on Value: Reinforce the value that your agency brings to the client. Highlight your commitment to providing quality temp staff, reliability, and any additional services that justify your charges. Perhaps mention how these aspects can positively impact their business in the long run.
Be Transparent About the Situation: If it’s appropriate, you could share the difficulties your agency faces with current rates and how the proposed increase is necessary for the sustainability of service quality. Framing it around the mutual benefits of maintaining a long-term relationship might resonate well.
Open a Dialogue: Suggest scheduling a meeting to discuss the changes further. This approach not only opens the door for a more collaborative conversation but allows you to address any concerns they may have directly.
By combining these elements, you’ll likely facilitate a constructive discussion that hopefully leads to a mutual understanding and maintains your relationship with the client while advocating for the necessary fee adjustments.