Tips on going direct?

[Andy Hallett]

If you are looking to go direct you have to take a very long term view of it. You will need to develop your network, stay in touch with older customers and create referral groups with other contractors.

[BlasterBates]

Contractors mistakenly assume that if they cut out the agent they get to keep the agent's margin. The problem is the margin doesn't belong to the contractor it actually belongs to the client. A client who is paying a contractor directly will expect to pay less for the contractor, otherwise why should they bother.

[jamesbrown]

Contractors mistakenly assume that if they cut out the agent they get to keep the agent's margin. The problem is the margin doesn't belong to the contractor it actually belongs to the client. A client who is paying a contractor directly will expect to pay less for the contractor, otherwise why should they bother.

I agree w/r to those contractors who tend to get work through agencies but, in my experience, there isn't much overlap between clients or contractors who work directly with each other and those who intermediate via agencies. Working direct normally means a specialised skillset or tendering. Working via agencies normally means a generalist skillset (again, a generalisation). The only overlap is when contractors do follow-on gigs for past clients or get in via contacts or word of mouth. So, yeah, if the normal operating mode for a client is paying an agency margin, I can see where you're coming from, but direct contracting is somewhat of a different world too.

[d000hg]

Depending on how big the margin is, there might be easily enough pie for both parties to get a slice.
Every company I've worked (contractor or employed) has really hated how much recruiters et al cost them and consider it about as distasteful as we do; caveat I work at smaller companies.

[Robinho]

Contractors mistakenly assume that if they cut out the agent they get to keep the agent's margin. The problem is the margin doesn't belong to the contractor it actually belongs to the client. A client who is paying a contractor directly will expect to pay less for the contractor, otherwise why should they bother.

The burden of the agent fee is shared between the client and contractor. In a world where everyone had perfect knowledge of gigs and contractors available, contractors would charge more and clients would be saving money as well.

[BlasterBates]

The burden of the agent fee is shared between the client and contractor. In a world where everyone had perfect knowledge of gigs and contractors available, contractors would charge more and clients would be saving money as well.

It isn't shared, if it were the contractor would pay the agent commission. Basically a contractor quotes a rate, the agency pays that rate in full, the client then pays extra to the agency for the service provided by the agency. A client will rightly see that not using an agency will result in a cost saving to the client.

[d000hg]

It isn't shared, if it were the contractor would pay the agent commission. Basically a contractor quotes a rate, the agency pays that rate in full, the client then pays extra to the agency for the service provided by the agency. A client will rightly see that not using an agency will result in a cost saving to the client.

Do agencies all use fixed (and transparent) margins these days or is there still a lot of murkyness that the client has no idea how much extra the agency is costing them?

[Lance]

Do agencies all use fixed (and transparent) margins these days or is there still a lot of murkyness that the client has no idea how much extra the agency is costing them?

It's mixed.
Large clients dictate the rates to the agency.
But there may be another agency below that who takes the margin they want.

Smaller clients get less say as they less buying power.

[northernladuk]

Do agencies all use fixed (and transparent) margins these days or is there still a lot of murkyness that the client has no idea how much extra the agency is costing them?

First question to ask is if the agent is on a fixed margin. If they are (and confirmed in an email so they aren't lying) then it's all open and transparent. No chance of negotiating rates and they aren't ripping you off (in theory). Both client and contractor know the score.

If it's not a fixed margin then I'm sure the clients know what the agency is costing them. It's in the paperwork. What they won't know in some cases is how much the agent is paying the contractor. We've had a couple of threads on here where the client has been surprised by the rate the agency is taking. They are paying 500 quid and getting a 300 quid contractor so should be concerned about that but I don't think it's commonplace. It's very bad business by the agency to do that to a client so as pretty rare thankfully. .
We know that rates can be from 8% to 20% and that is dictated by the number of contractors on site and so on so a client has to expect if they only have a couple of contractors the agent cut is going to be higher than a sausage factory situation so the agency can make their money.

[Robinho]

It isn't shared, if it were the contractor would pay the agent commission. Basically a contractor quotes a rate, the agency pays that rate in full, the client then pays extra to the agency for the service provided by the agency. A client will rightly see that not using an agency will result in a cost saving to the client.

Yes the client is billed. However if there were no agent fees, supply/demand dictates that companies would hire more contractors - as they are cheaper. And by hiring more that would put upwards pressure on rates, until it settled somewhere in between and both sides are getting a slice of the agent fees.

So we are both paying for agents even though the client is the one that ponies up the cash.