A common question from buyers of relocation services - “How do you make money?” Depending on the type of service provider and/or type of services being provided, one or more of these common pricing structures may be used.
1) Administrative / Service Fee for Specific Item: a flat dollar amount or hourly rate; based on resource time/cost to deliver
2) Cost Plus Service Fee: a “pass through” of all transaction expenses incurred plus a flat dollar amount or % (of a stated item)
3) Fixed Fee: a fixed / capped price is given. Supplier manages and pays all transaction expenses; the remainder is supplier revenue
4) Zero Service Fee: revenue is derived from referral / marketing services agreements with contracted suppliers and/or supplier invoice mark-ups
Unless prohibited or disclosure required, in addition to the above stated definitions, a supplier may potentially be securing revenue from such items as referral / marketing fees and/or marking up subcontractor invoices, charging miscellaneous transaction fees (e.g. postage, wires, emails, issuing check), interest spread on funding arrangements and/or exchange rates.
To maintain a confident, healthy relationship and effectively balance cost with services received, it is best practice to have the cost and revenue structure be understood by the client and clearly defined in supplier contracts.
-The Team at HR&Relo Advisors