Worked margin on a small Italian client: partner rate against platform price

A small Italian client looks simple on a pricing sheet. The margin only shows once you lay out every line between what the client pays you and what your Italian partner charges you.

This article walks through that structure in words. It uses no figures on purpose. The exact amounts depend on contracts, contribution classes and collective agreements, and they change. Use your own numbers in the model below.

The scenario  

A foreign company signs with your platform. It wants a small team employed in Italy. You do not hold a local entity. You work with a local partner that runs the employment side: contracts, payroll, social security filings and the employer-side obligations.

Two prices matter.

• The platform price is what your client pays you.
• The partner rate is what the Italian partner charges you.

Your margin is the gap between them, minus the costs you carry yourself.

Step one: separate the pass-through lines  

Some lines move through your books without being yours. Gross salary, employer contributions and statutory accruals belong here. Your client owes them, the partner pays them out, and you only relay them.

Keep these lines apart from your fee. If you blend them into one monthly figure, you will misread your margin. Salary changes, an overtime month or a contribution rate update will look like a margin swing when nothing about your fee changed.

So the first rule is simple. Margin is calculated on fees only. Pass-through lines are shown, reconciled and excluded.

Step two: define the fee layer  

The fee layer is what is left after pass-through. It has two sides.

On the client side, your platform price is usually a per-employee monthly fee. It may include onboarding, offboarding, and support tiers.

On the partner side, the partner rate is usually also per employee per month. It may add separate charges for hiring, for terminations, for visa work, or for extra filings.

For a small client, the per-employee fees dominate. One-off charges matter less than the recurring gap. But a single early exit can still move the result, because the partner may charge a one-off fee that your platform price does not recover.

Step three: the margin formula  

Write it down so everyone on the partnership and finance teams uses the same one.

Gross fee margin equals platform price minus partner rate, per employee, per month, summed across the team.

Then subtract the costs that sit with you:

• Payment and foreign exchange costs on the client invoice.
• Support time spent on this client.
• Tooling and integration cost per active employee.
• Credit risk, meaning the cost of carrying the partner’s invoice before your client pays yours.

What remains is net margin. For a small client it is often thin, and it is very sensitive to the support line.

Step four: what moves the result  

Four things change the outcome more than the headline price.

Mix of one-off work. A client that hires fast and loses people fast pays your platform price for each event, but the partner may price those events differently. Check that every partner charge has a matching line on your side.

Payment timing. If the partner is paid before the client pays you, you finance the float. On a small client the float is small, but across many small clients it adds up.

Support load. A small client often asks as many questions as a large one. If your support cost is flat per client rather than per employee, small clients lose the most.

Rate changes. Contribution rules and collective agreements change over time. Pass-through lines move on their own. Your partner rate should not move with them unless the contract says so. Read that clause.

Step five: set a floor  

Before you sign a small Italian client, set a floor for net margin per employee per month. If the platform price minus the partner rate, minus your own cost lines, falls under the floor, either change the price or add a minimum monthly fee for the account.

A minimum fee is the cleaner fix. It protects the margin without hiding the per-employee price from the client.

What to ask your partner for  

A clean margin model needs clean data. Ask for:

• A monthly statement that splits pass-through lines from fee lines.
• Event-level detail for hires, exits and changes, with a reference your system can match.
• Advance notice of any change that affects the fee layer.
• A stable identifier for each employee across both systems.

Without these, reconciliation becomes a manual task. Manual reconciliation is where small-client margin disappears.

Summary  

Treat salary and statutory costs as pass-through. Calculate margin on fees only. Subtract your own cost lines. Set a floor. Use a minimum fee when the account is small.

Partnership teams that want to model this against real data can request the data-exchange specification.