How to Price Your Staffing Services
Owning a staffing firm can be profitable, but only if you know how to bill your customers. Striking the right balance is key and a big challenge for this competitive industry margin.
Charge too much; you might lose contracts to your competitors. Too little, and you are undervaluing your services and cutting into your profit
Whether you have been in the business for decades or just starting up, it is not always clear what you should be charging customers to keep competitive and still make a profit.
When overcharging your customers is present, you will have to convince them that your company is the best solution for their staffing shortage. You will have to work harder to gain that contract. If you are slightly overcharging however providing the best care, they will tend to overlook the increase of cost for the expertise your staffing agency offers. There are hundreds of staffing agency; What makes your agency better than the lower bidding companies? How do you stand out among your competitors? Always be open to negotiation however consider the value of your employees.
An under bid can be more harmful to your staffing agency than overbidding. You must consider what goes into your staffing bids. Many different distinct factors go in to pricing out your staffing firm services, below is a list of components to help you determine a fair rate to charge your clients while keeping your business generating profit.
When starting a firm, we think there are four key things you must consider:
- Employee
- Specialty (Niche)
- Insurance
- Payroll Funding
The people you hire are by far your most important asset. To remain competitive and get quality staff your payrate must have value to the employee. To accomplish the first task, your bid rates must be adequate, under billing will devalue your employees. Have you ever heard the old saying. you will get what you pay for? This is true with staffing low bids means you pay your employees less for their services. Also, if a business is paying out more in expensive than they are generating revenue, your company does not sustain a market adjustment. You will find yourself in bankruptcy.
Understanding your niche is critical. Your Niche is your special service you provide your client. This is how you will convince your client that are the best solution for their company. You can build on to your niche, however, make it clear exactly what you are offering.
For a new firm, you will need various insurance policies, such as Worker’s Compensation. Workers’ Compensation is usually expensive for new start up staffing agencies. And may cause many business owners to decide not to go into business. Although this is difficulty to obtain but it is not impossible. You do have options and depending on your niche will assist the workers compensation company to determine your how it will cost. Beware of Workmen Compensation companies price gouging. It is important to research the insurance companies as well. You must do your due diligence to assure you are setting your company up for longevity and success. There are options for startup companies in spite the market will challenge you.
Finally, you will have to secure the appropriate working capital. Startup temporary staffing businesses have significant and immediate cash flow needs. It is up to you to figure out which financing option works best for your goals. Most companies are offering daily and weekly pay. You must understand your employees and company’s needs. There are a few evidence base funding lenders recommend by multi- million-dollar staffing agencies.
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