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- Mark ups on production costs is one of the most common and yet the most flawed agency fee model.
- A market up is added to all production costs, especially external costs to cover the agency management of the production.
- This is particularly common on printing and can amount to significant revenue for the agency with little or no effort or resource cost.
- It also acts an incentive counter to good business and that is it rewards the agency for selecting high priced suppliers rather then the supplier that provides the best value.
- It may also encourages a culture of additional kick-backs and secret commissions with suppliers as it is seen as a ‘way of doing business’.
- We strongly recommend to avoid production mark up and service fees.
- Read more about Production Mark Ups here
