Re: Agency Response - margins

Subject: Re: Agency Response - margins
From: "David B. Demyan" <dbdemyan -at- WORLDNET -dot- ATT -dot- NET>
Date: Sun, 18 May 1997 21:03:11 -0400

KTINY -at- AOL -dot- COM wrote:


> Margins
> in the NY metro and Boston metro area do not support 50% as a
> standard
> mark-up. It rarely happens at KTI. In those situations where we do
> request
> and gain a higher than normal mark-up, we are generally promising
> something
> more than just a final deliverable.

DBD: I agree that mark-ups are nowhere near 50 percent. We at
Mendem Concord went into the business to combat high markups
and pass as much of the billing to the consultant as possible. While
our clients are happy to set rigid upper bounds on the rates they
will pay, and granted, the willingness to pay has increased some-
what lately, we never get the opportunity (nor would we use the
opportunity) to take half the billing. That's a guaranteed disaster in
waiting. (Both client and consultant miffed.)


> In addition, much of our
> business has moved towards project-based engagements where KTI is
> directly
> responsible for the timeliness and quality of our solutions. NOT the
> consultant.

DBD: This scenario works well for some clients who are willing to
pay higher rates for more than just a body. It is also an opportunity
for the shop to charge higher mark-ups (because the shop's owners
or other permanent people are doing part of the work). At Mendem
Concord, we only offer those add-on, expensive services if the
client requests it.

> I have experienced the uncollectable receivables, the scenarios
> where the
> client is not totally satisfied and we (KTI) refund a certain
> percentage of
> the cost of the project, and the bank costs associated with paying
> our
> consultants long before we receive payment from our clients.
> Somehow 50% doesn't sound all that unreasonable.


DBD: I *don't* agree. Cutting the consultants rates down to
50 percent of billing to cover normal costs of doing business
is unfair. We know the cost structure as well as other firms;
it is nowhere near high enough to justify 50 percent mark-up.

> To the consultants out there, demand the rate that you feel is
> appropriate
> and just. You always have the opportunity to say NO or market your
> services directly.
> Any other consulting firms care to chime in?

DBD: I will agree: Consultants, demand a rate
that you know to be fair and does not gouge you. If you want
to know the billing rate, just ask. If you want to know if add-on
services are being billed, find out. You may just get straight
answers and feel confident, as many of our long-term employees
do, that you are getting a "fair wage for a fair day's work."

David B. Demyan Mendem Concord, Inc.
Toll Free: (888) 753-8500 Technical Writers
FAX: (908) 756-0129 Document Conversions
dbd -at- mendem -dot- com

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