What is the 'usual' agency clip?

[unpresidented]

Hello again to all - and I do not intend to make inane questions a habit for the amusement or irritation of others - but this one I am hoping to get some direction on.

Having searched the forums, it appears that an agency margin of 20-25% is not uncommon in the UK? So, by way of example, if one sought or was offered a role at the nice round number of 500, the agency is likely to apply an additional 100-125 per day on top?

(I'm certainly not denying them their margin....I fully appreciate they have a significant cost structure and an entitlement to profit.....it's simply the 'environment' I am hoping to clarify. Furthermore, I appreciate that this number, or set of numbers, will be a range that varies from agent to agent, client to client, day to day, etc).

So as to shoot the breeze, back home in Aus a margin of 20% would be considered exorbitant - most have an 'all in' margin around the 17% - which often includes their own direct costs such as payroll or insurances. Those who try to pass through as much cost to the contractor may often settle for 8-12%, with the lower number usually reserved for those agencies on a PSL, where the client demands an 'open book' on costs.

[northernladuk]

Your figures seem exactly the same as here. Next question.

[MrMarkyMark]

it appears that an agency margin of 20-25% is not uncommon in the UK?

Not true. I have only known 20% once, for myself, when I started contracting, a good 14 years or so ago, now.

8-15% is more common.

[NibblyPig]

Current gig is just under 10%, cos I saw the PO

[LondonManc]

Not true. I have only known 20% once, for myself, when I started contracting, a good 14 years or so ago, now.

8-15% is more common.

Yep. First contract, many of us get stiffed for rate. It's at that point that the fondness for agents blossoms....

[SimonMac]

What does it matter? You give a rate you are happy to the agent, anything they get on top of that is not your concern, would you ask McDonalds how much profit they make on a cheese burger they sell you?

[LondonManc]

What does it matter? You give a rate you are happy to the agent, anything they get on top of that is not your concern, would you ask McDonalds how much profit they make on a cheese burger they sell you?

You eat at McDonalds?

[NotAllThere]

What does it matter?

It can be quite important. Consider this scenario. You and your fellow contractor are getting £500 a day. You work through different agencies. Your agency charges the client £625 a day (25%). The other chap's charges £575 a day (15%).

The client on that basis (not knowing about margins) may well consider that you should be providing a better service than your colleague. Furthermore, if they need to make cuts, then you'll be the first to go.

If the amount the client pays to the various agencies doesn't vary, then yes, you're right. It doesn't matter. Except to the client, as the lower paid contractor is more likely to be attracted away for a higher rate.

This is why it's important for clients (who have the power) to dictate margins.

[MrMarkyMark]

The client on that basis (not knowing about margins) may well consider that you should be providing a better service than your colleague. Furthermore, if they need to make cuts, then you'll be the first to go.

Exactly

[fidot]

Margins versus Markups

Also bear in mind, that when discussing agency margins, they are correctly talking a percentage of the total they receive from the client. Many of the figures quoted in this thread earlier are shown as markups, which is the wrong way to think of things.

e.g. client pays £500, contractor is paid £400. This is a 20% margin (which happens to equal a 25% markup)