How do relocation companies price their services?
“How much will it cost?” is a critical question for anyone shopping for goods or services. Vice President of Business Development Brian Fudenberg looks at what drives pricing for relocation companies.
Complete transcript: “Hi, I’m Brian Fudenberg Vice President of Business Development at Plus and my question is, ‘How do relocation companies price their services?’
Well, as shoppers, the natural question to ask is, ‘How much will it cost?’ And it’s no different when companies inquire about mobility services. Unfortunately, no two companies have the exact same mobility program, so developing a pricing proposal is more complex than say pricing a manufacturer of a widget with defined quantities and specifications.
There are four significant components of a company’s relocation program, which may effect the revenue earned by the relocation company and the cost of managing that program. The first component is the makeup of your company’s relocation population. If moving your people within the U.S., what percentage of them are homeowners versus renters or how many of your employees will be receiving a lump sum cash only benefit? Or if moving people globally, are they moving on long term assignments, short term assignments, interregional moves or permanent relocations? The second component is your company’s interest in paying service fees. Ordinarily when a company initiates a new move with a relocation company, a service fee is charged. These fees can be reduced by the existence of the next two components.
The third component is supply chain revenue. When you agree to use suppliers under contract with the relocation company they will earn revenue from these suppliers such as household goods movers and temporary living providers based on licenses and agreements. This additional revenue will further lower the fees charged by the relocation company. And finally, real estate referral fees. Relocation companies earn additional revenue when they refer your employees to highly qualified real estate professionals that help them buy and sell homes. When these referrals are received the relocation company is able to lower your service fee and more importantly deliver a higher level of service to your relocating employees.
Hopefully this has helped you understand some of the factors effecting pricing by relocation companies to manage your mobility program.”