Re: Agency Response - margins

Subject: Re: Agency Response - margins
From: "Wilcox, John (Contractor)" <wilcoxj -at- WDNI -dot- COM>
Date: Sun, 18 May 1997 22:44:00 -0700

From: David B. Demyan
Date: Sunday, May 18, 1997 6:03PM

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.)
> 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.

It seems there is some confusion here about the term markup. If the
consultant is getting half of what the agency charges, that isn't a 50%
markup -- it's 100%. If the agency charges, say, $45.00 per hour, and
the consultant gets $30.00 of that, that's a 50% markup.


John Wilcox, Documentation Specialist
Timberlands Information Services
Weyerhaeuser, WWC 2E2
Tacoma, WA 98477-0001
253-924-7972 wilcoxj -at- wdni -dot- com

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