Understanding Markups
The markups displayed as part of The People Ticker’s search results represent an average of the markup data points that we have collected in The People Ticker. Since we are collecting markup information from a number of sources including hundreds of agencies and thousands of engagements, the range of markups captured vary widely. Some of the most common factors that contribute to the variation in the reported markups are:
- Expertise of buying organization
- Corporate contracts
- Competitive solicitations
- Type of skill set, i.e. programmer vs. receptionist vs. warehouse worker
- Volume of business
- Relationship of contingent worker with agency, i.e. W2 employee, independent contractor, etc. · Benefits paid by agency for contingent worker (Paid holidays & vacation, medical coverage, life insurance, 401K, training, etc.)
- Length of assignment
- Other overhead and general & administrative expenses
- Profit
As a way of controlling bill rates, a client company may negotiate a fixed markup % for the agency to be applied to the pay rate. This may be based on any number of factors including skill type, geography, competitive solicitation, etc. This approach has the billing rate going higher as the pay rate rises, which increases the agency’s margin in real dollars. The principal drawback to this approach is the agency does not have any incentive to locate and place candidates at the lowest, competitive pay rates since they apply the agreed upon markup % to the pay rate. This illustrates a need to understand and monitor the pay rates.
A drawback of the markup approach, if not managed appropriately, is the loss of the most qualified talent since the staffing agencies may be inclined to place their most qualified individuals with customers with the highest markups. Therefore you can see the importance of competitive pay rates to attract the most qualified talent and competitive markups to insure the placement of the qualified talent with your company. The People Ticker allows users to make decisions in these matters by providing them with the most current market knowledge available today.
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