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What is the profit margin for MSC?

February 05, 2024 08:31PM
I just got a 5 Guys shop for a $30 fee. I have seen these shops in the desert area go for $120 fee. I once got a gas station audit for a $120 fee. Most of these shops pay between $9 and $18. What is the profit margin for the MSC's when they pay the lowest fees?
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February 06, 2024 01:04AM
I suspect margins are pretty good for this industry. For instance for the apartment video shops I know that a couple of the MSC bill the client at $300/shop. Listed fee for an apartment shop is $50-$60. Editing of the shop is probably $10 and then the rest is pretty much overhead such as platform fees and others. So I suspect margins are quite healthy.
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February 06, 2024 06:11AM
In what I seem to recall was 2009, I had a meeting with the owner of a small MSC. While at the restaurant for our discussion, I mentioned to another party he billed $295 for a video shop and paid a fee of $60.
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February 06, 2024 11:18AM
I would say it's pretty good; especially when you consider per job, per state, per city, etc.

Shopping Arkansas, Louisiana, & Mississippi.
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February 06, 2024 01:38PM
I don't know, but they also have to pay platform fees (Sassie etc.,) schedulers, website maintenance, payment handling and processing, office rent in some cases, and travel etc. to recruit and maintain clients. I would guess some MSCs are doing well while others are struggling and having to work with thin margins or even take a loss just to stay afloat, as with any industry.
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February 09, 2024 01:16AM
We had a national program at one point with the same MSC that does Five Guys. It's probably about 15 years ago and we were paying about 250 per location with about 10,000 locations nationwide monthly. We no longer shop our stores but that's how I got into this!

Edited 1 time(s). Last edit at 02/09/2024 01:17AM by foodluvr.
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February 09, 2024 01:20AM
So $250 minus $8 shopper pay less overhead, editors and schedulers was the profit margin. So a bonus of $100 for several hard to fill shops to complete the contract would be a nonissue.
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February 09, 2024 02:36AM
@foodluvr wrote:

We had a national program at one point with the same MSC that does Five Guys. It's probably about 15 years ago and we were paying about 250 per location with about 10,000 locations nationwide monthly. We no longer shop our stores but that's how I got into this!

Did they shop all locations monthly at $250? That’s $2.5 million each month or $30 million annually. I’m shocked a company would invest that much into mystery shopping/outside auditing.

Did the company charge each location the MS fee on their P&L?

Edited 1 time(s). Last edit at 02/09/2024 02:37AM by Capurato.
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February 09, 2024 02:57AM
Yes, they did shop every store monthly for several years. They had a budget for it and charged it back to the areas but not the individual store P&L.

Also, if we asked for a reshop, we got charged for that after a certain number. If we appealed a certain shop, they would reshop at their cost if we could prove the shopper was identified or did something blatantly incorrect.

They eventually got rid of the program when it was no longer effective and wasn't identifying behaviors that related to real customer experience.
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February 09, 2024 03:56AM
@PA Shopper wrote:

I suspect margins are pretty good for this industry. For instance for the apartment video shops I know that a couple of the MSC bill the client at $300/shop. Listed fee for an apartment shop is $50-$60. Editing of the shop is probably $10 and then the rest is pretty much overhead such as platform fees and others. So I suspect margins are quite healthy.

And also the forms seldom change. I think the apartment shopping company I have done so much work for has had the same form for nearly 10 years. I noticed that they have streamlined some of their forms but really, once the form is set, it pretty much is static.
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February 09, 2024 04:35AM
One thing is that the Corporate Clients might charge their franchisee a fee for having a mystery shop done. I was doing an Exxon shop. As I was talking with the owner of the gas station he said Exxon charges him $60 for each mystery shop performed. So, he has to pay Exxon to be evaluated each month. So, I don't know what the MSC charged Exxon, but Exxon is offsetting that amount by charging their station owners a fee.
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February 09, 2024 01:10PM
@PA Shopper wrote:

One thing is that the Corporate Clients might charge their franchisee a fee for having a mystery shop done. I was doing an Exxon shop. As I was talking with the owner of the gas station he said Exxon charges him $60 for each mystery shop performed. So, he has to pay Exxon to be evaluated each month. So, I don't know what the MSC charged Exxon, but Exxon is offsetting that amount by charging their station owners a fee.

That’s what I was thinking occurred. There is “no” way that a company will eat the cost of the MS on their own, the bean counters wouldn’t allow it ahaha.

I also suspect the MS programs are part of compliance and the cost spread across many cost centers.
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February 10, 2024 06:27AM
One small MSC once inadvertently sent a copy of the invoice they sent to their client for my work. They were billing 4x my fee.
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February 10, 2024 06:49PM
Have not seen data but believe Rousseau and surmise that MSC world is much like that of temporary placement agencies. They pay temps less than they receive from clients and presumably profit even when clients hire/buy out the temp employees' contracts.

My garden in England is full of eating-out places, for heat waves, warm September evenings, or lunch on a chilly Christmas morning. (Mary Quant)


Edited 1 time(s). Last edit at 02/10/2024 06:50PM by Shop-et-al.
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February 11, 2024 05:54AM
@PA Shopper wrote:

One thing is that the Corporate Clients might charge their franchisee a fee for having a mystery shop done. I was doing an Exxon shop. As I was talking with the owner of the gas station he said Exxon charges him $60 for each mystery shop performed. So, he has to pay Exxon to be evaluated each month. So, I don't know what the MSC charged Exxon, but Exxon is offsetting that amount by charging their station owners a fee.


That is absolutely correct. They also have to pay Exxon for each infraction and, depending on what is wrong, they may have to buy new equipment. If I remember correctly, for Exxon, if there is no uniform or badge, it's $75 per violation. I know a couple of owners who recoup the costs from the employee who violated.

I had one BP location that was billed over $3,000 for all the infractions I found. I found out when I went back the next quarter and the owner showed me the bill. He had my report which showed the loss of points, plus the infraction fee. Then, because his score fell below a certain threshold, he had to pay.

At the end of the day, the fuel companies may actually profit off the shops because of the infractions. So, when we see the c-store prices going up, just remember that owner is recouping his losses.
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February 11, 2024 11:26AM
Well, if you look at the Big I job board (Sassie Site) and shops in the WY-UT-ID-MT area, there are some with a $100+ bonus and dozens paying $30+. They seem to be doing alright.
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February 11, 2024 06:26PM
Selling drug paraphernalia and THC-infused food and drink can cost a gas station owner $5000-$10,000 per occurrence in fines. The MSC takes a cut of that.

Of course, we are the ones taking the risk and producing the photo evidence for $0.00 extra. It’s infuriating to think about.
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February 11, 2024 08:16PM
@Shop-et-al wrote:

Have not seen data but believe Rousseau and surmise that MSC world is much like that of temporary placement agencies. They pay temps less than they receive from clients and presumably profit even when clients hire/buy out the temp employees' contracts.

Agreed. Agency workers tend to make around minimum wage, while the agency is making a significant markup due to the fact they have to provide the labor and everything that comes along with it.
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February 11, 2024 09:32PM
I don't worry about an MSC profit margin. I am concerned about my personal cash flow.

Well, here's my profit margin YTD (Year To Date)...with the S&P 500 at record levels, I just looked and I'm up over $181k. Since trees don't grow to the sky, I'm sure there will be a correction because that's about 4.5k per day. Per day! Since I started mystery shopping about 10 yrs ago, my net worth has increased 9.7% annually (after taxes).

MSC profit margin...that's noise.

Think differently. Change your mindset.
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February 23, 2024 03:12PM
It is similar and arrangements can vary widely. Generally, the temp agency is their employer, so they are paying the fed and state taxes on the temps. Some agencies also provide benefits like a 401K.
When a temp goes into a perm position, the agency normally will charge about 30-35% of the salary as their commission.
US commissions for staffing is about 30-35% EU commissions are vastly different and the agency may have to charge a VAT tax as well.
There's also arrangements like volume discounts, length of project, etc.
Source: my full time job is software for staffing and project based work.


@Capurato wrote:

@Shop-et-al wrote:

Have not seen data but believe Rousseau and surmise that MSC world is much like that of temporary placement agencies. They pay temps less than they receive from clients and presumably profit even when clients hire/buy out the temp employees' contracts.

Agreed. Agency workers tend to make around minimum wage, while the agency is making a significant markup due to the fact they have to provide the labor and everything that comes along with it.
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February 23, 2024 03:13PM
Some of the MSC's, if you visit their website as a potential client, will show what they charge per shop.
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