Agency Making 50% margin

[northernladuk]

Looks like the focus has shifted to what I said and what I understand.
What I wanted to find out here was what should be best way or ways to attempt a rate rise in this case.
Anyway, appreciate your views.
Thanks.

Because we've finally got some details to work with.

I still think you need to wait until renewal as you've signed a contract and agreed to work to it. At renewal tell them you know what the client is paying and you want Xxx a day or you won't renew. You have to really be prepared to walk. He'll smell a bluff a mile off.

I also don't think all that money is yours. You might be low for your skill base but that's another piece of information we don't have.

Something is terribly amiss is if you client is paying that much.

[WordIsBond]

33% is high. 50% is almost criminal, and grounds to kick up a fuss immediately.

The best way to think about this is to start by forgetting the £1200 and think just about the £800. We'll come back to the £1200 later but forget it to start. You agreed to £800 as a reasonable rate worth accepting in your market / skill set.

If that is accurate, then the agent isn't ripping you off, they are paying you a fair price but are ripping off the client. You may wish you had a piece of their action but then you'd be ripping off the client, too. But you are getting a reasonable rate.

If it isn't accurate, you did it to yourself by agreeing the rate. And, you can't claim you were manipulated or beat down because you already showed a willingness to walk away from this deal if you didn't like the terms. So, if you now claim you are underpaid, it's pretty hard to blame anyone but yourself.

So, it seems to me the best interpretation of the situation is that the £800 is a reasonable rate for your services and one you've accepted, and the agent is taking advantage of the client. Whether you can or should take advantage of that knowledge may depend on what's in your contract as far as discussions with the client about rates, etc. If your contract says your rate is confidential and not to be disclosed to the client, then you can't involve the client, or threaten the agent with doing that. So not all of the suggestions below may be possible.

But it seems to me you can find something in this list that you could do.
1. Go back to the agent now and say, 'This is absurd, give me more or I'm going to blow this up.' If you pull in another £100 they still have a great deal, at least that much should be coming.
2. Tell the client, 'The agent is ripping you off and I'm not going to be a party to it. Either they need to cut what they charge you or increase what they are paying me, or split it and do both. They could easily cut your rate by £100 and increase mine by the same, and still make a nice fee for themselves.' I would probably try going the agency route first, but saving the client £100 a day WOULD be a nice feather in your cap.
3. Do nothing until renewal and then tell the agent, 'I know what you've been taking from this client and I want at least £200 of that action.'
4. Do nothing until renewal and then cut out the agent. Tell the client you know what they've been paying the agent and you'd be willing to renew direct with them for £1000, £200 less, if they will reach an agreement with the agent to release the handcuffs. Tell them you'd be willing to pay up to X amount of any settlement with the agent.

If the project is likely to last a while, I'd be inclined to do #4, personally. It's not like you'll be starving between now and renewal. And that is likely to be better for you, in the long run, then chiseling another £50-100 out of the agent.

[Old Greg]

Looks like the focus has shifted to what I said and what I understand.
What I wanted to find out here was what should be best way or ways to attempt a rate rise in this case.
Anyway, appreciate your views.
Thanks.

The way you described it originally suggested that you were getting 400 and the agency was getting 400. I thought that was worth reopening at renewal. Now we know you are getting 800 and the agency 400. That is a big markup but I would let it go, unless you know somewhere you can get >800 pd.

If you are really keen, in advance of renewal you could conspire with the client so you get 850 and the agency gets a 300 pd markup. There are risks.here which I would be very cautious about for another 6%. I doubt the client will be that bothered to save 5%.

Let me ask you, what is your goal for your rate and the agency markup?

[NotAllThere]

I have been doing contracting for last 10 years.

Offtopic ... but that was a bad choice of username you made back in 2011!

[oilboil]

Jesus. I'd be having a word in the clients shell like if that's the situation. Who the hell pays 1200 for a contractor. You can get an Accenture consultant for that.

Oh. That said you'll never get anywhere near that. The client is being over charged, not you being massively underpaid. You'll know what market rate is for your skill set.

You might be able to get a junior accenture consultant for that but not one who could do the job without senior oversight (and therefore more cost) - you certainly couldn't get a consultant from one of the real "Big 4" for that number though (unless it was part of a massive 40+ person project)

£1000+ per day whilst not an everyday number certainly isn't beyond reality for decent programme managers or highly skilled niche technical resources (come of the AI - BigData stuff springs to mind)

[NoviceContractor]

Thanks WordIsBond for your advice.
I do not think agency would ever agree to release me even after the payment as I have never been able to do that in past even when agency was making less than 8% markup but they were not ready to release me. Some other agencies may agree but I have not been that lucky.
Me waiting for another 12 months before I ask the agency for rate change - the project may be over by then or the agency may simply refuse and I would be back to square one so I might ask for it now.
I think I will involve client as they want to retain me. I have taken a heavy crate cut to stay in work but now that I know the rate client is paying, I am not comfortable with this arrangement anymore.
I will start the ball rolling with client...

[WTFH]

Who the hell pays 1200 for a contractor.

Want me to PM you a list?

I've done work for some smaller "consultancies" who don't have in-house expertise. The rates they charge their clients when they need to bring in contractors tends to be £1200-1500.
It's almost like the late 90s all over again.

[Lance]

Want me to PM you a list?

I've done work for some smaller "consultancies" who don't have in-house expertise. The rates they charge their clients when they need to bring in contractors tends to be £1200-1500.
It's almost like the late 90s all over again.

I used to be charged out for £1200 in the late 90s and that wasn't even for Y2k remediation.
I didn't see much of that

[oilboil]

Want me to PM you a list?

I've done work for some smaller "consultancies" who don't have in-house expertise. The rates they charge their clients when they need to bring in contractors tends to be £1200-1500.
It's almost like the late 90s all over again.

I think we'd all be happy to have a copy of that list

[WordIsBond]

Thanks WordIsBond for your advice.
I do not think agency would ever agree to release me even after the payment as I have never been able to do that in past even when agency was making less than 8% markup but they were not ready to release me. Some other agencies may agree but I have not been that lucky.
Me waiting for another 12 months before I ask the agency for rate change - the project may be over by then or the agency may simply refuse and I would be back to square one so I might ask for it now.
I think I will involve client as they want to retain me. I have taken a heavy crate cut to stay in work but now that I know the rate client is paying, I am not comfortable with this arrangement anymore.
I will start the ball rolling with client...

I can assure you agency would release you if it came from the client (not you) and they were getting some money for it. Kind of a moot point if you are on 12 months and the project has a good chance of ending by then. That suggests you are right to do something now.

You catch more flies with honey than vinegar. Or, don't swing a big stick if a small one will do. Personally, I'd talk to the agent first. If you talk to the client you've made an enemy of the agent and might regret that, they are in a position to make your life less pleasant than it could be. And the client may not push for you to get more, they may push to pay less themselves. So I'd be inclined to talk to the agent first and see if they'll just increase your cut.

They might be jeopardising their standing with the client so they probably don't want you to talk to the client about this one. So, let them convince you. Ask them for £200 more, settle for £100 or £150, they are still doing very nicely out of this. And if they won't do anything for you, then you talk to the client.

I wouldn't threaten to talk to the client, though. I'd probably just tell them what you know and tell them you don't consider it acceptable and want an increase now. If they won't budge, I'd then go to the client.