Right now is a very good time to be in the contract staffing services industry. Companies are optimistic and have started to expand but are still being very cautious about bringing on new hires permanently. The staffing industry as a whole is expected to continue to grow at a good pace throughout 2015.
As a contract or temporary staffing services company, you want to make sure that you have put yourself in the position of being competitive when it comes to pricing yet still standing apart from some of the other staffing services in your area. When it comes to marketing and pricing, staffing agencies need to do the proper research to make the right decisions.
There are several factors that you need to consider when you set your pricing. With the right pricing, staffing services can be very successful. With the wrong pricing, staffing services can flounder.
Your Staffing Niche
Your first consideration should be the industry sector that you are supplying. If you are in a highly skilled niche market, for example IT or engineering, you can certainly look at pricing that is on the higher end. Some staffing services will bill a markup as high as 75 percent for a highly skilled professional due to the level of expertise and demand in the market. If you are looking at more traditional markets such as clerical or general labour, you will have to price your services at a much lower rate. Traditionally, staffing services are broken into three sectors:
- Office and clerical
- Professional and technical
The length of the contract placement may also affect your pricing. Depending on the niche, you may charge a little more for a short-term assignment than you would long term, as the search for someone qualified for the assignment is the same regardless of length.
Your next consideration should be to look at what your local market will bear. Where you are located geographically and the number of competitors in the same area, makes a very large impact on how you can price your staffing services. In one area, it may be common for industrial sector staffing services to charge 30 percent. In another, perhaps more urban area, 50 percent may be the industry norm. You need to find out what other staffing services are charging and come in at a competitive level so as not to be too far over or under the standard amount.
Finally, you need to look at the relationship that you have with the client. If you have a client that is giving you a significant amount of business, you should offer them a rate that is more favorable. High volume clients can end up being the lifeblood of your staffing service. Providing them with a discount helps you in the long run. This is also true if you have clients that you have been servicing for a long period of time. You might not offer them the same discount that you would to a high volume client, but even a small discount shows them that you appreciate their business and will help you to keep that business.
It’s also very important to manage your client’s expectations. For example, if you are in the business of supplying Information Technology Experts or Oil and Gas Engineers, you need to inform your client of the fluctuations in the industry. Finding a professional in these industries a year ago is not the same as finding them now. An honest conversation with your client will go a long way.
The niche you are choosing to serve, the location and the current market will often dictate the amount that you can charge. These three factors are not only important for any contract staffing firm to understand but can also change as the industry fluctuates so taking some time each year to assess these elements will help your staffing firm remain competitive.