How do RMCs price their services?
“How much will it cost?” is a critical question for anyone shopping for goods or services. Director of Business Development, Dan Johnson, looks at what drives pricing for relocation companies.
Complete transcript: “Hi, I’m Dan Johnson, and welcome to Relo Tip Tuesday. My question is: “How do relocation companies price their services?”
As shoppers, our first question is often, “How much will it cost?” It’s no different when companies are inquiring about mobility services. Unfortunately, no two companies have the exact same mobility program. So, developing a pricing proposal is more complex than pricing a product with pre-defined quantities and specifications, like office supplies or tools for a shop.
There are four main components of a company’s relocation program which may affect the revenue to relocation companies, and the expense of managing the program. These all factor into pricing.
The first is the make-up of your company’s relocation population. Within the U.S., what percentage of your relocating employees are homeowners versus renters? How many receive only a lump sum benefit? Globally, are your moves long-term or short-term assignments, or permanent relocations?
The second component is your company’s interest in paying fees for service. Typically, each time a company initiates a new move, a relocation company charges a fee. The fee charged may be reduced depending on the next two components.
The third component is supply chain revenue. If you agree to use supplier partners — such as household goods movers or temporary living providers — under contract with the relocation company, the RMC will often earn revenue based on their licenses and agreements. This will lead to reduced fees for your company.
And finally, relocation companies may earn revenue from referring your employees to highly qualified real estate professionals to help buy and sell homes. If these referrals are received, the fees charged by a relocation company will be lower and, more importantly, your employee will have a better experience.
Hopefully, this provides a better understanding of the factors affecting the pricing proposed by a relocation company to manage your mobility program. Thanks for watching!”