Advice on best way to ask for rate increase...

[zippy.mini]

I've just been inadvertantly told what my current client is paying the agency for my services. It's over 20% more than I'm receiving. I took a smaller rate than I ideally wanted to get my foot in the door at this client as I believe there may be scope for repeat work. Increasing the rate to what I really wanted would mean the agency would have to cut their margin from over 20% to just under 15%. Do you think that's a reasonable request? The client have expressed an interest in extending me (my understanding is that they will choose to extend my contract but not others doing the same job) and I do also bring SC clearance to the role, which will make me able to do more roles within this client co (it wasn't required for this role but may be for future ones).

I would like to know how others have approached this situation and whether their approach has been successful. Do I tell the agency that I know what their margin is now and ask them for what I want? Or is there a better way?

[northernladuk]

Tell them what you want and if the don't give it to you you walk. Period. If you start asking or come in looking weak they will play you like a fiddle. They are experts at this so you've got to play hard and make it stick. Anything above 10% cut is taking the piss really especially when they have already done the work and are now creaming it. Just to repeat, be prepared to walk. If the agent gets a hint you are bluffing you will fail.

On that kind of margin I imagine the agent will say no first but as soon as you tender your notice they will fold. They won't cut their revenue stream off and piss the client off just for a cut in their margin.

Time to see how big your cojones are....

[rootsnall]

You could try the softly softly approach but in practice when dealing with agents ( who have similar requests all the time and are used to fobbing you off ) I think you have to play hardball, just quote your new rate and be genuinely prepared to walk away if they don't pay it. In the circumstances you describe I'd suggest you are struggling, no definite requirement for your services yet, and rival contractors probably willing to step in.

ps. WHS

[mudskipper]

Just to clarify, margins aren't the same as markup.

So if you get £100 a day and the agent gets £120, that's a 16.66% margin. (20/120 * 100)

[TheFaQQer]

In your demands, make sure that you make it clear to the agency that you expect the increase to come from their margin being cut rather than them asking the client for an increase.

[SlipTheJab]

Tell them what you want and if the don't give it to you you walk. Period. If you start asking or come in looking weak they will play you like a fiddle. They are experts at this so you've got to play hard and make it stick. Anything above 10% cut is taking the piss really especially when they have already done the work and are now creaming it. Just to repeat, be prepared to walk. If the agent gets a hint you are bluffing you will fail.

On that kind of margin I imagine the agent will say no first but as soon as you tender your notice they will fold. They won't cut their revenue stream off and piss the client off just for a cut in their margin.

Time to see how big your cojones are....

What NLUK said, ask for what you want and make the agent aware that this should come out of their cut (you don't want them going back to the client complaining that you want a massive increase so they are having to put up their rate to the client). 20% is fine initially but at renewal you should be looking at 10% margin. Any more is taking the p!ss. Oh and yes be prepared to walk and tell the client why if you have to, good luck!

[northernladuk]

Just to clarify, margins aren't the same as markup.

So if you get £100 a day and the agent gets £120, that's a 16.66% margin. (20/120 * 100)

Good point well made

[BrilloPad]

Best way I have found is to get another gig - then tell them it is for more money(whether it is or not).

[zippy.mini]

You could try the softly softly approach but in practice when dealing with agents ( who have similar requests all the time and are used to fobbing you off ) I think you have to play hardball, just quote your new rate and be genuinely prepared to walk away if they don't pay it. In the circumstances you describe I'd suggest you are struggling, no definite requirement for your services yet, and rival contractors probably willing to step in.

ps. WHS

The reason for mentioning the other contractors is because the client has decided they want me rather than the others (they only have a small amount of money left on the project and can't afford to keep all of us). The agency isn't the one who is choosing me, so even though they do have other contractors willing to step in, it's not up to them! It would be an interesting conversation if the agency had to tell the client I didn't renew because they wouldn't reduce their margin (and if the agency were to lie about that, the client will know, because I will tell them)... I was thinking this puts me in a stronger position, not a weaker one...

[zippy.mini]

Just to clarify, margins aren't the same as markup.

So if you get £100 a day and the agent gets £120, that's a 16.66% margin. (20/120 * 100)

Yep, the maths as above works out that the agency margin is 20.7%

I want to bring that down to 14.6%