Transcript
Yeah, that's a great question. I want to differentiate for us here a second. we were built in the staffing space, and there's a very well-established pricing model in the staffing market, right? Which is what they call POP or percentage of payroll. Right. So our current pricing model, which is consistent with most contingent workforce or staffing models, is a percentage of payroll, meaning it's payroll plus X percent, right? Depending upon the industry, it can be as low as 16 to 17%.
Or if you're in a high risk industry, it can be all the way up to 25, 26%, you know, high risk. It just depends on that. The workers' comp code really is the number one issue. And then along with the state. so as far as how this works, really straightforward, Fox Hire is going to make on average three to five percent net profit on every placement. most of the money that is in that 16 to 20, whatever percent that we're gonna charge is going to taxes, insurance, workers' comp, benefits, right? So
It's a low margin industry. Now that's US. And the US can do that because it's the well-established pricing model, but also you've got the weekly or hourly billing type. Okay, right. So because the US is at will employment, people don't get paid every single month no matter what, like internationally. Right. And so you've got to build it in a way that clients only pay for what they use, meaning they only pay per hour for that work. So that's where you get the bill rate pay rate combination.
Does that make sense? So every hour somebody works, they get paid an X amount, and I'm gonna charge you Y amount. That's how it works in the US staffing and contingent model. Now let's compare that to the global market. Global market, the pay frequency is the number one driver here for one. Most global markets are paying people on a monthly basis. So to price it monthly makes so much more sense than in the US where it's hourly, right? So they're charging you, they're charging for taxes, right? They're saying, it's $599 and $4.99, or it's going to $2.90 a month, right? That's their service fee.
You still have to pay the payroll and the what they call statutory costs, right? So we call it monthly flat fee. There's a number of different ways people describe it, but it's payroll plus statutory plus monthly fee. And then they can tack in any of these other fees that you're talking about, right? For FX, onboarding, offboarding, right? There's so many different events that happen through the process because of the international labor laws, right? When somebody's onboarded.
They're in probation period. When they're offboarded, you've got to have a notice period, right? You gotta, and if you don't do that properly, hire them, fire them at the right time according to those laws. You could have early termination fees, all this, there's all these events that they can tack on money to, which they do. And they're finding ways to make a profit because that service fee of $299 a month is not enough to really profit from the EOR model given the risk, because there are gonna be problems that happen.
with injuries or employee relations issues or lawsuits that are gonna eat away that profit. So I agree. I think the global pricing model is really problematic because it's r it's it's it's not as mature and people haven't become as mature enough at as from a buyer perspective to ask these questions. Whereas in the staffing model, that's like 30, 40 years old. Everybody understands what's going on. They they know all the the charges and the fees and everything and how it works. So it's much more transparent and it's simpler. It's just add twenty percent to payroll and you got the number.
This other model of global is way more difficult. And I get why global EORs do it, but it can create a lot of challenges, like you're saying.
