-
How should I handle this?
-
Totally agree with Mark.
Could be that your pricing is too low. Seriously. Some agencies like to have a certain price range they stay in for “value of services.” I’ve actually had one agency tell me to bill them more because they passed my direct invoice on plus their markup…. 40%. The higher my bill, the more they make.
Maybe it’s time to reevaluate your price structure.
Steve
-
Aaron, the markup you’ve questioned covers much more than your services. There are “carrying costs” that real businesses must consider if they want to stay in business. And, the very reason they hire freelancers is because they know they can get away without paying benefits to contractors, and thus they can keep more of the revenue generated in their own coffers. Is that exploitation, or smart business?
Below are a few examples of the carrying costs I refer to above:
1) The producer who hired you for Agency A has a salary, receives benefits, and gets a year-end bonus tied to performance and profits. Cha-ching! He/she was smart enough to hire you in the first place, and it took some time and planning by numerous employees of the agency, including management, to make that happen. Should Agency A be required to eat that time?
2) Agency A has all kinds of business insurance that covers everything from injuries on their premises to lawsuits based on sexual discrimination and even gross negligence and incompetence on your part. (Isn’t it comforting to know you’re probably covered in case you’re personally sued by Agency B?)
C) Agency A has a real bricks and mortar office that has rent, cleaning, maintenance, phones, computers, and even more insurance, etc., etc., etc.
D) Agency A has legal counsel, a CPA, and also has to pay tax on profits.
Okay, have I made my point? Do you realize that there’s a whole lot more involved in hiring you out than just your fee? Do you see how unfair it is to say Agency A “did nothing?”
David Roth Weiss
ProMax Systems
Burbank
DRW@ProMax.comSales | Integration | Support
David is a Creative COW contributing editor and a forum host of the Apple Final Cut Pro forum.
-
David,
“Agency A” is a small run-out-of-the-house 2 person operation, so i know that their operating costs are minimal. Bottom line, I got good advice from this post and my follow up post was more curiosity than anything else. Thanks for pointing out some possible reasons for their mark up.
-Aaron
-
I know my cost to obtain a client runs anywhere from $32.50 – the person who calls with an emergency and I have a 10 minute conversation to get them on my schedule – to around $1,500.00 if I’m going to have a meeting, do some research, write a proposal, take them to a not-too-fancy dinner, have a few calls & send a few emails. If they like a $200 bottle of wine with dinner, I better be pretty darn sure I’m going to make a sale.
Steve
-
Steve and Aaron. Even a small business run out of their home has expenses. There’s insurance, Marketing expenses, Website expenses, advertising, networking, relationship building, office equipment, etc. All that adds to the bottom line.
It’s really not your business what your client charges their client. But as others have said, perhaps it’s time to re-evaluate your own rates.
Reply to this Discussion! Login or Sign Up