Shop Smart for Services: Avoid Dealing with Middlemen

I cannot stress this enough.

As usual, I’ll use a story to illustrate my point. I’ll try to keep it brief.

The Flight

Today, Flying M Air did a 2-hour charter for two men from Texas. They’d come to Phoenix to do a rather unusual aerial survey. I don’t think it would be appropriate for me to go into details of what it was all about, but I can say that it required me to fly low and slow over a bunch of commercial properties all over the Phoenix area.

The flight was booked last minute in an odd way. I got a call from a local airplane charter company who told me that these two guys had shown up to charter a helicopter — which the airplane charter company did not have. Could I take these guys on a survey flight? I spoke to one of the clients, got a few quick questions answered — including their weights, which I needed to calculate a weight and balance for the flight — and told them my rates. Then I hung up and got ready to meet them at the airport in less than two hours.

I was just leaving when my phone rang. It was XYZ Company (not their real name), which I wrote about at some length here. The short version is that XYZ is a booking company that markets itself as a provider of aviation (and other) services but doesn’t own a single aircraft. Instead, it hires third party companies (like mine) to provide the services,

The XYZ person on the phone told me they were sending two clients to me. She then proceeded to describe the job I’d booked directly with the client.

I told her I’d already booked it with the client and that the client was going to pay me with a credit card at the conclusion of the flight. I was trying hard to keep XYZ out of it. It didn’t matter much to me — I’d get paid the same amount whether they were involved or not — but I simply don’t like the way XYZ does business. But the caller told me that the client already had credit with XYZ and that XYZ was willing to pay me for the 2 hours of flight time up front with a credit card.

I didn’t want the client to pay me and still be on the hook with XYZ, so I took the payment. I then called the client and told him what had transpired. He seemed happy enough.

I went to the airport and did the flight. It was far from an ideal setup. For some reason, the client expected me to know the addresses of the buildings we flew over. As if flying a helicopter 300 feet off the ground while watching for obstructions and other traffic and talking to an airport control tower wasn’t enough of a workload for me. They were completely unprepared to get the location information they needed — hell, a handheld GPS, which I could have provided with enough notice, would have been a real handy tool.

But the client seemed satisfied with the flight. It was a nice day to fly and I was paid up front. So how could I complain?

The Lesson to Be Learned

I do, however, want to use this story as a lesson to folks shopping around for services — perhaps for holiday gift-giving.

There are several points to be made about what transpired. Although these points deal specifically with XYZ, they also apply to similar organizations that act as booking agents for services:

  • XYZ Company makes money off every flight it books. It typically marks up my services by 30%. So yes, if you bought an hour of flight time from me, it would cost you $545. But if you bought the same hour of flight time with XYZ in the middle, it would cost you about $700. In today’s story, these guys spent $300 more than they could have for the same service.
  • XYZ Company does not give refunds. For any reason. If you need to cancel a flight, you get a credit for the amount you paid. You have one year to use it elsewhere. Since I don’t (usually) take payment in advance, when you book with me, you don’t need to worry about refunds or credits. So if XYZ had been unable to book the flight with me, these clients would probably be stuck with a credit.
  • XYZ Company charges a fixed price for the service you say you need. So if you want 2 hours of flight time, you’ll pay for it up front. If you fly only 1-1/2 hours, you’re out of luck since they don’t give refunds. But because I charge charter clients based on actual time flown, if they fly less than expected, they pay less than expected. In fact, I typically overestimate flight time so folks feel good when the final cost is less than they thought it would be.
  • XYZ Company can’t be relied upon to get a reservation handled correctly. This is a classic example: they booked an airplane when the client clearly needed a helicopter! These guys flew in from Texas for this survey — imagine if there weren’t any helicopter charter operators available to do the flight on such short notice. They would have made the trip for nothing. Another time, they booked a 5-hour survey flight for a client that required landing illegally in a wilderness area (which I was not going to do). And I can’t tell you how many phone calls it takes to arrange a flight for a client with XYZ in the middle. Right now, I’m waiting for a yes/no answer on a flight they’ve called me about four times already — and I still don’t know if it’s going to happen.

Yet time after time, people turn to companies like XYZ, relying on a middle man who knows nothing about the provider’s capabilities or operations. The chain of communication is never properly established, services are misrepresented, clients and providers get unpleasant surprises at job time.

And the buyer of the services is paying a 20% to 40% premium.

What are they getting for this extra cost? Well, they don’t have to call more than one company that appears in Google’s search results.

You see, that’s how these companies get the calls. They buy up domain names and Google AdWords. They set up generic websites for local helicopter tours or airplane tours or balloon rides or skydiving. You search and they come to the top. You look at their site and you think they’re some big adventure travel company with airplanes and helicopters and hot air balloons all over the country. You call and they assure you they can help you. So you stop looking and let them do the work.

Is that worth 30% more than you could pay?

If you think so, fine. Like I said: it doesn’t affect me. I get paid the same amount, whether you book through me or them.

But in a day and age when everyone is so hot for deep discount deals like the ones Groupon offers, it seems so very strange to me that people would be willing to give money away to a middleman just because he knows how to dial a phone.

What do you think?