Rate Negotiations Advice

[BristolCloudGuy]

Hi, long time lurker, first time poster.

I’m an engineer in the DevOps/cloud infrastructure space who’s been contracting since 2020. Throughout this time I’ve always been in a contract, and have been with three different clients, shortly about to be moving to my fourth. All of my contracts have been through recruitment agencies; my first three contracts I just applied through public job boards, but for my most recent contract I was approached by the agent having been given my name by a former colleague.

My post relates to how to respond when an agent invariably asks you what rate you’d be willing to accept. I always feel as though I’m making blind stabs in the dark in this area. This played out recently in the negotiation for my fourth contract which I’m soon about to start). Some facts on the scenario:

• Agent says that the role is paying £550-£600 outside IR35.
• The role is for a small consultancy (I’d never heard of them), with end client of a large household name insurer. So between me and the end-client there are two layers of ‘middle men’: contractor (me) → recruiter → consultancy → end-client (insurer).
• The role listed 1 day a week on-site in Bristol, so I guess the candidate pool is smaller than a fully-remote role?
• I feel quite well qualified, but not 100% the ideal candidate (the job spec listed Kubernetes in the 'required skills' which is a bit of a weak point for me).

I say I’ll work for £550 because i) this is similar money to my current contract and as a 39yo dinky this is good money for me. ii) a cursory look on jobsite says this is a good rate in the current market, iii) I feel like quite a good fit but not an ideal candidate so I don’t want to go in at the top of the rate band. iv) I keep an eye on the ‘state of the market’ thread and I’m reading lots of horror stories about people being out of work for months or years; I feel as though now is not the time for being super picky about rate.

In a phone conversation with the recruiter the agent said something along the lines of "What was the rate again, £575?", and then instantly corrected himself saying £550 - not sure what to make of this. Although I’m happy to work for £550, obviously if my application had been accepted at £575 or £600 I’d rather work for that rate. I don’t have an axe to grind with the agent, but if it’s between £25 or £50 going into their pocket rather than mine obviously I’d rather it was mine.

My questions are:

1. How can I know what is the true ‘market rate’ for a given skillset right now? My current approach to this is just scanning job boards.
2. Is there anything to be said for positioning your pricing in the middle of the stated rate band, in the hopes that the end client will consider this when choosing whether to accept you? Would you be hesitant to go in at the top of the rate band?
3. Is it possible the end client will never even see the ‘cheaper’ rate, and all of that money will go into the pocket of either the recruitment agent or consultancy?
4. Any other factors I should be considering when saying what rate I'd work for?
5. Are there special considerations when there are two layers of middle men? I’d guess the more layers of middle men the lesser a rate you need to be willing to accept?

I’d guess I can’t be the first contractor to find these negotiations tricky. I didn’t really find the advice I was hoping for on the search function so thought I’d open a thread. Any input more seasoned contractors can offer would be greatly appreciated.

Cheers,

BCG

[t0bytoo]

You can either be upfront and tell them what rate you want, or agree to whatever they say, then go a bit further down the process and tell them what rate you want. It's a game. And if you play it, you usually get more money.

Beware, though. Agents read these boards and as it's a small pool, they might suss you out.

[BristolCloudGuy]

You can either be upfront and tell them what rate you want, or agree to whatever they say, then go a bit further down the process and tell them what rate you want. It's a game. And if you play it, you usually get more money.

Perhaps I'm setting myself as a disadvantage here but once I state the rate I'm willing to work for I don't want to renege on that - I had a client do this to me once and it was a huge red flag, I immediately pulled out of negotiations.

[t0bytoo]

I don't specifically commit to the rate. I say something along the lines of "that's fine". A week later, there might be other opportunities and you can say, "well, the market is looking a bit better now".
The agents will be playing all kinds of games so it's okay to be a bit vague. if someone asks "what's your rate", I usually say "market rate".

btw, I wouldn't play this game with a client. I guess it's worth learning to see that agents are not clients. They're the middlemen who - in an ideal world - would actually represent the contractor's interest. But they don't.

[Dorkeaux]

btw, I wouldn't play this game with a client. I guess it's worth learning to see that agents are not clients. They're the middlemen who - in an ideal world - would actually represent the contractor's interest. But they don't.

I almost spat out my Horlicks..

In our industry agents do _not_ work for you, nor represent your interests.
They are employed by, or are trying to be employed by the end clients.
Their money comes from the client, not you.

The agents might try to make it sound like they have your interests at heart to make you more compliant. That's all.

[fatJock]

Personally I think it's mostly irrelevant with the key thing being ...."am I happy with the rate I'm getting and does it reflect market rate?".

Agencies have to make a margin and, anyone thinking they're working for contractors needs to give their head a wobble.

[TheDude]

Contractors have driven themselves to madness speculating on what sort of haircut their agent is applying.

Worry about what is going in your pocket rather than worrying about what is going (or what you think is going) into other peoples pockets. Rock the boat too much and they will find someone else.

[Smartie]

I've always asked for the top of the range and it has seemed to work.
The client has a budget and the agency will get their margin. There's a chance that if you go in low, the agency will simply take more of a margin.
Anyway, psychologically, expensive things are generally perceived to be of higher value - reassuringly expensive :-)

[Dorkeaux]

I've always asked for the top of the range and it has seemed to work.
The client has a budget and the agency will get their margin. There's a chance that if you go in low, the agency will simply take more of a margin.
Anyway, psychologically, expensive things are generally perceived to be of higher value - reassuringly expensive :-)

This is very true.
Someone is getting the higher rates, it might as well be you.

The dynamic is that as the rates are on a bell curve, the higher-paying roles are thinner on the ground.
So, a numbers game (as I keep saying).
If you have a war chest, and offset the time to obtain the upper rates against the total coming in over the year, add in what it looks like having a gap.. you find a balance.

I find the day rate isn't just money. It's about the value and respect that is associated with the role, and to you.
Like Smartie said.
If you doubt this, try doing pro bono work or give a rate discount and see how well you are treated.

[Snooky]

Contractors have driven themselves to madness speculating on what sort of haircut their agent is applying.

Worry about what is going in your pocket rather than worrying about what is going (or what you think is going) into other peoples pockets. Rock the boat too much and they will find someone else.

Until the client starts wondering why they're paying £2x for a contractor who only appears to be providing £1x of value (because that's their rate).

Keeping an eye on commission rates is definitely worth doing.