If you use a traditional relocation management company (RMC) to manage your corporate relocation program, here’s an elephant-sized piece of news you should know: many—not all, but most—RMCs routinely markup relocation expenses in order to make a profit.
For example, a domestic household goods shipment may be marked up by more than 7%. Short term housing may be marked up by more than $5-$10 per night. If you’re grossing up, the impact is multiplied by the need for extra tax assistance. Add it all together, and by our calculations, markups typically add an extra $2,000 or more to the cost of each move, on top of fees employers are already paying.
Maybe you don’t want to think about your relocation program this way. Maybe you don’t want to rock the boat. But there are several good reasons you should start caring about RMC markups—starting with our top five.
- RMC Markups Cost You Money
If you’re like most employers, you’re trying to keep your relocation program within a set budget. Given the current state of the economy, you may be working with deeper budget cuts.
So, take that typical $2,000 markup, and multiply it by the number of relocations you sponsor per year. For example, 100 moves per year equals $200,000. That’s $200,000 of pure waste in your budget. Can you afford to be okay with that?
- RMC Markups Cost Employees Money
RMC markups cost employees, too. Because their moving costs are inflated, they’re more likely to exceed their policy budgets and incur out-of-pocket expenses, including additional tax liability incurred solely due to markups.
A major goal of your program is likely to increase employee satisfaction and give relocating employees a positive relocation experience. Forcing them to use their own money to be where they need to be to work for you is as negative an experience as it gets.
- RMC Markups Cost You Time
Markups cost you time, too. With relocation costs higher than necessary, you may be struggling to make sense of your invoices and reports. Or, you may need to create a campaign every year, petitioning management to increase your budget. Maybe you’re wondering how to cut program costs without cutting benefits. Whatever way you look at it - you’re spending time where you may not need to be.
- RMC Markups Prevent Cost Containment
Speaking of cutting costs, your relocation partner should help you contain costs - not add to them. When your RMC needs you to spend money in order for them to make money, its interests aren’t your interests. Your goals are misaligned. Simply put, it’s not a good match.
- RMC Markups Destroy Trust
The idea that your longtime RMC may be marking up your invoices is undoubtedly hard to swallow. Your RMC may be the exception. However, if you’ve wondered why your costs are so high, or why you never see actual vendor invoices, it’s time to investigate.
Ask yourself, if your RMC has been engaging in this unfortunate industry practice, how can you trust them with your program going forward?
The Markup-free Alternative: UrbanBound
At UrbanBound, we believe in transparency. We’ll tell you exactly how we make money, and we are able to create programs that involve zero markups.
We charge a straightforward license fee per move, period. We pass through the exact cost of each vendor directly to our clients. In fact, you can even view your vendors’ invoices right on the UrbanBound dashboard. We value transparency, as well as honesty.
We negotiate with vendors on our clients’ behalf to keep costs down. Our side is your side.
Although our Relocation Consultants provide excellent customer service, our solution is largely tech-based, supported by knowledgeable and supportive people. That means our expenses are lower than traditional RMCs out of the gate.
As a result, we save our clients an average of 66% over traditional RMCs—while delivering an exceptional relocation experience.
Want to learn more about going markup-free? Start right here.
To learn more tips on evaluating your relocation partnership, check out our updated Ultimate Guide to Evaluating Relocation Partners 2.0 here.