Independent recruiters have both an exciting and a challenging market ahead of them. Many changes in the past few years have forced recruiters to change their tactics and become more competitive. Other changes have opened up more opportunities than ever before.
The staffing industry is currently in an immense growth phase in Canada, spurred by shifting employer and employee demands. Employees want more flexible workplaces, and employers want a more flexible workforce. Staffing industry professionals can help both sides achieve what they want.
One of the most challenging aspects of operating an independent recruiting business is setting prices for contract services. Going too high or too low can spell trouble, among other things. Here are a few of the most common pricing mistakes, and how you can avoid them in your business.
1. Independent Recruiters Can’t Go Too Low
As an independent recruiter, it might be tempting to set your prices at the lowest possible point to undercut your competition. If you offer the best price, it’s likely you’ll drum up the most business, right?
Unfortunately, going too low can cause problems. If your prices are too low, you may not be able to break even, let alone turn a profit. Your competition may have set their prices higher for a reason.
Another issue with low pricing is that it can turn potential clients away. They may feel you must offer poorer service or are unable to truly deliver what they need based on your prices.
2. Sky-High Prices Are a Problem Too
On the opposite end of the spectrum are independent recruiters who set their prices too high. They may bank on selling their clients superior services, but many will see the price tag and turn in the opposite direction.
High prices will limit the number of clients who will utilize your services. As you can see, setting prices for independent recruiters is truly a “just right” scenario.
3. You Didn’t Conduct Market Research
Pricing your services too high or too low often stems from another mistake. Many independent recruiters don’t research their market thoroughly enough. Good market research should reveal to you the “sweet spot” for pricing.
Market research includes surveying your clients and prospects about what they’re currently paying and how satisfied they are with their services. You can also ask what they’re willing to pay or what they believe they should pay for superior service. You can also discover what your competitors are charging.
From all this information, you can begin to determine the right pricing structure for your contract services.
4. You Don’t Offer a Sliding Scale
Another common mistake is charging all clients the same fee across the board. This means your large clients pay as much as your smaller clients, even though you may end up doing more work for those larger clients.
This often ends up driving certain clients away. Smaller clients may feel they’re paying too much if they’re being charged the same as larger clients, for example.
A sliding scale can help you meet every client’s unique needs more easily. Determining the right price is easier when you build flexibility into your pricing model.
5. You Use a Flat Rate
Do you charge the same price for every service you offer? Some independent recruiters do. This is often because they’ve just started offering contract staffing services, and they’re not quite sure how to price this service versus their permanent staffing solutions.
Again, your market research can help you find the right price for all the different services you offer.
By avoiding these common mistakes, you’ll be well on your way to creating a lucrative independent recruiting business.