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The margin pressures your staffing firm faces are among your most significant issues. If your margins aren’t high enough, you won’t turn a profit. However, if your margins are too high, companies won’t want to pay for your services. To resolve this issue, you need to find the right margins that provide profitability for your staffing firm and reasonable costs for your clients. Here are five ways to compete better with better margins.  

Avoid Giving Away Margin 

Study the industry numbers to make sure you’re charging enough. Because staffing is a competitive field, you may not be charging enough due to pricing pressure from other firms. Experts such as Staffing Industry Analysts (SIA) regularly report on margin and bill rate trends. If margin and bill rates are on the rise, consider increasing yours accordingly. Because you may lose clients due to a price hike, be sure you consider the risk before making significant changes.     

Evaluate Your Clients 

Determine whether you have any high-revenue, low-margin clients eroding your bottom line. They take up time you could be focusing on new and existing clients. Some clients can choose from similar staffing firms and pick the lowest-priced one. Other clients are in industries that can’t afford to pay for better quality or service. Use your ATS/CRM to run reports on your most and least reliable and valuable clients. Determine which clients typically are late paying their invoices or have the worst margin/gross profit. Consider whether you want to retain or replace these clients.  

Change Your Client Focus 

Focus on clients who demand higher quality workers and service. These clients tend to be small to mid-sized companies that are committed to quality and excellence in their work and are facing staffing challenges. Challenges may be due to rapid growth, a need to fill difficult positions or excessive turnover. Identify these clients, understand why they’ll pay more, and retool your staffing firm to provide the workers, service and value these clients demand.     

Increase Your Services 

Offer to your existing clients additional services that your competitors don’t provide. Because the talent shortage is a huge obstacle for employers, you may decide to focus on reskilling your candidates. Preparing them with hard-to-find, in-demand skills creates new qualified candidates for your clients and increases your revenue potential.     

Become a Boutique   

Specialize as a staffing firm that does one thing very well. You can charge more when you offer something not easily found elsewhere. You may focus on one industry, service or location, or very specific job functions. The key is to choose a very specific niche market with a client base willing and able to pay higher prices because they can’t get the services elsewhere.    

Get Help from Madison Resources  

Increase your margins with help from Madison Resources. We provide performance analytics and customizable reports that include trends on sales gross, gross margin, markup percentage, headcounts and more. Contact us to learn more today. 


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