Markup – Prices your services when clients want to pay less than you!

After 35 years of running a marketing business, one thing still bothers me. Margin! It seems and has always seemed to be a concept of deception: camouflage the real price of your service to make a profit at the expense of your client. And the customers don’t like it one bit!

Just take a look at the daily headlines. “Obscene profits on Wall Street continue to upset the public.” “Oil Company Profits Hit Record Highs While Consumer Suffers at the Pump.” “Big business profits are outrageous during the endless recession.” The average person doesn’t condone big profits in business when they’re struggling to put food on the table, not to mention losing their homes to foreclosure.

So how do these companies make such huge profits? Pricemarkup is one way. Charging customers more than they paid for what they are selling. Is that fair? As accepted business practice, it apparently is.

But in my experience with mostly small business owners, markup is a dirty word. My clients demand to know what I am paying for the services I offer them. They don’t seem to mind paying me a fair rate (translation: a very low price) for the services I provide with my own resources. This includes creative services such as design, writing, composition, etc. of advertisements, websites, brochures, etc. However, if I provide a service that involves a third-party provider for which I am charged a price, my clients want to know what that price is and not pay a dime more than I do. Therefore, no brands are allowed!

That doesn’t give me much room for profit as the paltry charges for my creative services can hardly cover my overhead in this economy. But the ironic part of this is that the outsourced services I provide to my clients have also been greatly affected by the current economic conditions, not to mention stiff competition, the changing business landscape, and tough times in general, forcing them to reduce prices to a minimum. , making it virtually impossible for me to mark them.

If I am buying printing for a customer’s brochures, my customer can get on the Internet and glance at the average prices being charged by hundreds of national printers, all of whom are bidding against each other for the limited printing business which still exists in this Internet age. Then, when my client knows what price I am proposing to charge for his work, he can assess if I have tried to cheat him and charge him a marked amount to make a profit.

I may pass up a small raise, but I feel like I have committed a crime against humanity and I suffer enormous guilt for doing so. How dare I trick him into paying a small surcharge just to fill my wallet!? Where is the justification in that, he probably wonders, losing respect for me in the process.

Well, I can defend why we have marked. On the one hand, it has taken me an arduous investigation to find the best quality and price; hours of careful and knowledgeable effort to prepare the document to meet the parameters of the service I decide to use; a lifetime of business experience to be able to judge which printer to use and whether price should be the final determining factor in my decision; and lastly, the risk of labor liability and loss of clients if the printer does not fulfill its function satisfactorily. Yes, it is my neck that is at stake, not my client’s!

Time is money and everything I do for my clients takes a lot of time. Isn’t that worth something? Apparently not, for the majority of my disgruntled clients, who are struggling on their own with the same unsettling circumstances! Nearly non-existent profits with increased overhead. It’s not easy for anyone. So I don’t blame them for their suspicions and irritations. However, reality dictates that I must make a profit to stay in business.

While printing is a service that cannot support a significant markup, there are many others that I offer that are also in the same boat. Mailing lists and mail services! Domain registration and website hosting! Stock photography! Advertising!… to name just a few. These are all services that have so much competition for that coveted limited business that they in turn can only charge a pittance for what they sell. So there is practically no room for me to charge a markup. However, the use of such services requires an endless investment of my time on behalf of my clients.

How? Let’s look at each one separately. My client wants to reach a certain segment of the market to present his offers. I need to get you a traditional mailing list or maybe an email list to get closer to that market. If the piece will be printed and mailed, I will have to strive to list quantities that will be manageable within your printing and mailing budget and offer a return on investment given the expected response rates. Then, with the help of a representative from the list, I begin the process of suggesting ways to reach our goal by setting geographic constraints, industry sectors, commercial or residential goals, etc. This usually results in lists that are either too large to consider or too small to waste effort. The process then continues with the parameters adjusted to try to arrive at a workable resolution.

In the case of stock photography, my client and probably most of the world believes that I will do nothing to deserve a justification for a high price. However, there are hundreds of stock photo houses, all with different ways to use their services, not to mention choosing rights-managed and royalty-free sample files with strict regulations on usage and a lot of responsibility as a buying agent. And what exactly are we looking for? Is my client an expert in assessing what type of visual we need to present the right marketing image and communicate their message effectively? Not usually, so I’m in the picture to begin with. Then, trying to access the available options within a given topic requires skill in coming up with effective search terms, and ends with having the aesthetic sensibilities and marketing savvy to navigate through endless possibilities, narrowing your search down to the few that they can be considered the best to use… and then make the final decision, pay for it and download a huge file to work efficiently on your project. How many hours, days and years of my experience were used to perform this service? Uncountable! However, it is doubtful that you will be able to add any markup. And if I do, it will have to be infinitesimal!

And that’s not taking into account that most of my clients prefer to try to take their own photos on digital cameras or cell phones that are not optimal and have poor resolution, requiring me to perform digital enhancement services to try to correct a multitude. of problems for which they expect to be charged nothing.

Domain registration and hosting services? These are so competitively priced today that companies are practically giving them away. (And in some cases…they are!) Yet the clients who need me to perform these services have no idea where to go, how much to pay, what is available, what they need, what the decision entails, how long It takes doing the research, navigating the intricate websites, configuring the many aspects of each to implement, keeping them running all year despite server issues I have no control over, etc… but they are certain of one thing. Your friend or family member has told you that you are being overcharged.

Finally, traditional media such as newspapers, magazines, radio and television eke out a living by offering advertising rates so low that it is embarrassing to advertise them here. And unlike domain companies, they can’t even give it away. So far the possibility of marking.

In articles I’ve read about markup, accountants have discussed the concept of “profit margin.” This involves applying a certain percentage to your cost to ensure that you will generate enough revenue to cover your overhead and make a decent business profit in the process. How neat.

In my reality, profit margin is a concept that I would throw out the window. I have to examine what prices the market will bear based on what my competition is charging and what my customer is willing (or able) to spend.

I’ve found that the best way to attract a new client to a long-term website relationship is to offer free domain registration and hosting for the first year because after that it’s usually too mind-boggling for them to try. be extracted. of what has been configured, especially if they fear that the success of their website may be in jeopardy. But this may not work for all customers and it’s important to have a multi-year contract so they don’t drop out after the first free year.

I’ve also toyed with the idea of ​​offering my creative services alongside other bundled services. But every customer’s needs are different and they still compare any price I quote to a price my competition may have quoted, whether we’re comparing apples and oranges or not. And, as I said earlier, if other services are expected, they want to know exactly how much I’m paying for those services.

You may wonder why I let my clients pressure me like that. When you deal one-on-one with a business owner who has entrusted every aspect of their business to you so that he can strategize marketing solutions for your benefit, direct questions about pricing sometimes become unavoidable. Since I do not consider my clients my adversaries, I try to be as honest with them as possible to build their confidence in my judgment. Our collaboration and success together is the heart and soul of our business relationship. I cannot deny you the right to ask questions about the cost. even if they are me costs are ultimately wear costs

As for the markup, I don’t like how it makes me feel, but if I can get away with it, I have to try to apply it in whatever situation I can handle it, as discreetly as possible, keeping my fingers crossed that no problems will arise. It is part of business survival that every entrepreneur must use and therefore must understand. But to this business owner, he still seems deceitful and dishonest.