Agency rates

[Maxamus]

My agency takes 25% margin on me. I actually suspect that they may be making 50%.

Am I bothered....not really. In 5 months my wage has gone from sub £20k to over £60k

I'm happy with it if the client wants to pay that much they can.

Rock and Roll!

[lukemg]

Agency sent me figures by mistake, they are getting 15% on PSL. Not a concern to me. However if not a PSL, you can be royally screwed by the agency and I would be annoyed at anything over 20%. Make no mistake this is cash that you could be getting. Especially if they have played games with you on the way in, last minute rate drop/talked the market down etc.
I think this is open to abuse and regularly happens, I would let the client know discretely what my rate is, say at first renewal and see if eyebrows are raised etc.

[Bluebird]

I can't understand how the agency actually justify their cut, all they do is process a timesheet and pass a payment on - Christ I could do that .

[malvolio]

I can't understand how the agency actually justify their cut, all they do is process a timesheet and pass a payment on - Christ I could do that .

Then you haven't been listening. Think that 90% of their effort does not result in a placement, hence no return on money spent - you still have to pay your staff, after all. Think of the costs involved if you have a few hundred contractors on your books that you are paying several weeks before you get paid yourself; that is somewhere around £1m dead money for every 100 contractors, rather more if you do the high end people. Think of advertising and marketing effort and compliance costs - ISO9001 and IIP aren't cheap, for example.

Their business is a lot more complex than yours, by quite a long way. That's why 10% is the practical lower limit for margins, unless you can cut the waiting time for payment. So it's not money for doing sod all.

[boredsenseless]

I can't understand how the agency actually justify their cut, all they do is process a timesheet and pass a payment on - Christ I could do that .

B@llox, if you could do what they do you wouldn't use them. Get a grip, they get to charge what they like because they own the contract to provide services not you.

It's no different to you walking into a furniture store and saying I'm not paying £400 for that chair cos its only £20 of wood and half a day of a guy on minimum wage to make. They'd tell you where to shove it, and frankly if I was an agent I'd tell you that too!

If you don't like what their revenue slice is then don't use them. Incidentally its all their money, you are the leach that is taking revenue from them by demanding more if you look at it in a real business point of view.

[DodgyAgent]

Then you haven't been listening. Think that 90% of their effort does not result in a placement, hence no return on money spent - you still have to pay your staff, after all. Think of the costs involved if you have a few hundred contractors on your books that you are paying several weeks before you get paid yourself; that is somewhere around £1m dead money for every 100 contractors, rather more if you do the high end people. Think of advertising and marketing effort and compliance costs - ISO9001 and IIP aren't cheap, for example.

Their business is a lot more complex than yours, by quite a long way. That's why 10% is the practical lower limit for margins, unless you can cut the waiting time for payment. So it's not money for doing sod all.

Our own costs are £80,000 per month, most of which go in wages to people who do a lot of running around without being actually paid for doing so. The second highest cost being factoring costs.

[pedro]

All-in rates

I just landed a bit of work that an agent missed out on because of his greed.
I was contacted by the agency before Xmas, for a role, I told him my rate excluding expenses. He kept pushing and pushing that the client wanted an all-in rate. After a bit of research I added £150 to my daily rate to cover expenses (flights and city centre hotels). He came back to say my rate was too high.
Through a network of contacts, I was offered the same contract direct, without the agency, at my original rate, plus all expenses. The consulting firm have no problem booking and paying for all my travel and accommodation.

The agent must have felt he wasn’t making enough off my rate, so wanted to bump it up with an all-in rate to increase the value of his margin. His greed got the better of him, the client is more than happy with me and my rate, I am happy too!!

[Bluebird]

Ok,
I take the point about the costs that agents uncur - so if it's all jutifiable - why aren't they more open about it ?

It seems to me strange that somebody I work for [ client ] has an expectation on me based on the rate they are paying - yet I don't know what that is.

Perhaps if it was more open I wouldn't be so suspicious...

[Zorba]

Pedro's comments on all-in rates are very interesting - I'd never thought about it like that. Obvious now, really! I get a lot of calls for EU jobs and there's been a recent trend towards an all-in rate versus 'plus expenses'. Now I know why!

(yes, I'm a bit naive sometimes)

[DodgyAgent]

Ok,
I take the point about the costs that agents uncur - so if it's all jutifiable - why aren't they more open about it ?

It seems to me strange that somebody I work for [ client ] has an expectation on me based on the rate they are paying - yet I don't know what that is.

Perhaps if it was more open I wouldn't be so suspicious...

Fair point. If you are up front about your margins it is not actually difficult to justify them, but it is still a pain in the a*** because contractors compare their rates with each other, and it is actually quite tiresome for agents to go through the "look what he is earning" process. I dont have a problem with this at all because I always suggest that if a contractor wants to compare his pay or margin to another contractor then why not put all their rates down to the lowest rather than up to the highest. Or when it comes to margins I always point out that I could give the discount to the client rather than the extra to the contractor, just as a contractor can say if he doesnt get the extra he will leave. So in the end it comes down to negotiation skills, but actually lying about margins is a no no yet many agencies do this.

I will also only reveal my margin:

1. If it is low
2. If asked

there is little point in giving away information unless it serves a purpose.
Conversley if I were a contractor I would want to know what margin the agency was making from me, simply because the information is useful to me.

If you dont ask you dont get.