1 year of living increases is not enough to push day rates up. That's permie thinking. You are on £500 a day!!!! You are in the top 1% of earners in the country. Complaining about cost of living increases on that kind of money is, erm, well... not gonna make you look very good. Rates in contracting have been about the same for 15 years that I know of. They used to be a lot higher in the hey day but it's pretty level now.
But lets discuss rises in general.
There are two places where your rate can increase. The clients charge card paid to the agency or the money the agency pays you.
Looking at the client it is VERY unlikely they'll change the card. You aren't delivering any more than you did in day one and conversely you are now familiar with the environment so could be delivering the same stuff quicker so not uncommon for clients to ask for rate reductions from suppliers in some cases. Thankfully that doesn't happen in contracting but just trying to get you in to the mindset of the client. So chances of increasing your rate from the client? Next to none.
The other area is the agency margin. They can be taking anything from 7% to 25% plus out of the clients rate. This is to cover the time and effort they put in to finding you etc. Once you've been their 6 months that's covered and their only outgoing is babysitting you. Perfect argument there that their commission can drop and this is where 99% of rate rises come from. You need to know what the agency is taking. You can often find out what the client is paying from project paperwork, lose lips and even the client mailing everyones rate to all contractors (yes really!! happened at one client I was at. Very messy). You've already mentioned the agency is on a fixed margin so that kills this area dead. Very unlikely you can squeeze their margin. It's likely they will be on sub 10% rate. Do the maths. Is 10% of their cut really worth rocking the boat anyway?
If you still want to go ahead and try some good points already mentioned, particularly about strong arming the agency. They will not give up their money if you ask for it. You've got to make it clear it's in their interest to keep you happy. Advise them what you want at next renewal, they may say OK and off you go on the new rate but more likely they will say no and you've got to say no thanks then goodbye. If you aren't willing to walk then don't bother. Agents do this day in day out. If they had a pound for every limp wristed attempt at a threat they'd all have two Bentleys each not just one. They will play who blinks first and 99.999% of the time it's you. If you are gonna go in and ask for 20 quid a day more when they are only taking, what £55 or something. Do you think that's gonna work?
As mentioned before, whatever you do, when negotiating a rise please please please do not mention the cost of living as an excuse. It will make you look like a proper tosser which is going to have exactly the opposite affect. That is permie thinking anyway and if you really think you need a rise because of a few percent in cost of living you need to think about your approach to contracting. You are running a business. If you are bothered about the cost of living then pay yourself more or take a bigger divi. That is not the client or agents problem. Your issue is the cost of doing business but again mentioning individual tax values when we get advantages working through LTD's isn't going to sit well with the perm agent on sub £30k + OTE a year.
In your case I think you are stuffed. Have the chat, push it as far as you dare for experience but don't expect anything from this. You need an agent that's not on a fixed margin to squeeze some more money out of them but I have to say, on £500 a day with all the benefits of working from home that we now with an agent on fixed margin you'd be mad to start rocking the boat.
Out of interest. When you say niche to the project, does that mean you have a niche skill or you have just picked up a role that's important for this project. The first is useful, the second isn't really. Everyone is replaceable so don't get too complacent that you think you are key to the project. I think we've all seen people leave projects that really are absolutely key and it's got rocky but its survived. What is it you are doing for this project?
But lets discuss rises in general.
There are two places where your rate can increase. The clients charge card paid to the agency or the money the agency pays you.
Looking at the client it is VERY unlikely they'll change the card. You aren't delivering any more than you did in day one and conversely you are now familiar with the environment so could be delivering the same stuff quicker so not uncommon for clients to ask for rate reductions from suppliers in some cases. Thankfully that doesn't happen in contracting but just trying to get you in to the mindset of the client. So chances of increasing your rate from the client? Next to none.
The other area is the agency margin. They can be taking anything from 7% to 25% plus out of the clients rate. This is to cover the time and effort they put in to finding you etc. Once you've been their 6 months that's covered and their only outgoing is babysitting you. Perfect argument there that their commission can drop and this is where 99% of rate rises come from. You need to know what the agency is taking. You can often find out what the client is paying from project paperwork, lose lips and even the client mailing everyones rate to all contractors (yes really!! happened at one client I was at. Very messy). You've already mentioned the agency is on a fixed margin so that kills this area dead. Very unlikely you can squeeze their margin. It's likely they will be on sub 10% rate. Do the maths. Is 10% of their cut really worth rocking the boat anyway?
If you still want to go ahead and try some good points already mentioned, particularly about strong arming the agency. They will not give up their money if you ask for it. You've got to make it clear it's in their interest to keep you happy. Advise them what you want at next renewal, they may say OK and off you go on the new rate but more likely they will say no and you've got to say no thanks then goodbye. If you aren't willing to walk then don't bother. Agents do this day in day out. If they had a pound for every limp wristed attempt at a threat they'd all have two Bentleys each not just one. They will play who blinks first and 99.999% of the time it's you. If you are gonna go in and ask for 20 quid a day more when they are only taking, what £55 or something. Do you think that's gonna work?
As mentioned before, whatever you do, when negotiating a rise please please please do not mention the cost of living as an excuse. It will make you look like a proper tosser which is going to have exactly the opposite affect. That is permie thinking anyway and if you really think you need a rise because of a few percent in cost of living you need to think about your approach to contracting. You are running a business. If you are bothered about the cost of living then pay yourself more or take a bigger divi. That is not the client or agents problem. Your issue is the cost of doing business but again mentioning individual tax values when we get advantages working through LTD's isn't going to sit well with the perm agent on sub £30k + OTE a year.
In your case I think you are stuffed. Have the chat, push it as far as you dare for experience but don't expect anything from this. You need an agent that's not on a fixed margin to squeeze some more money out of them but I have to say, on £500 a day with all the benefits of working from home that we now with an agent on fixed margin you'd be mad to start rocking the boat.
Out of interest. When you say niche to the project, does that mean you have a niche skill or you have just picked up a role that's important for this project. The first is useful, the second isn't really. Everyone is replaceable so don't get too complacent that you think you are key to the project. I think we've all seen people leave projects that really are absolutely key and it's got rocky but its survived. What is it you are doing for this project?
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