Asking about agencies margins in interviews?

[TheFaQQer]

called cutting off your nose despite your face.

"cutting off your nose to spite your face"

[ChimpMaster]

I agree that the agency provides a service and hence deserves some compensation. What gets to me is that they continue to receive compensation for as long as the contractor remains at the client.

Take this as an example - I know contractors who have been extended several times at the same client - due to their own professionalism and hard work. They have been at this same client for years (I know one who is getting onto 7 years now).

If this contractor is on, say, £500, and the agency is charging £100 commission, that means that the agency is getting almost £25,000 for every year that the contractor is there. And for having done nothing since they introduced him there!

Now tell me, does the agency really deserve to receive such an exorbitant amount for the couple of hours work it did on day 1?

Again, I don't really care as I look at the rate I am getting rather than what the client is paying overall. However, I do think it's unfair that anyone (i.e. agencies) should get long term income for not doing any work.

[thunderlizard]

does the agency really deserve to receive such an exorbitant amount for the couple of hours work it did on day 1?

Kind of. The agency isn't charging for its time, unlike us contractor mugs. It's charging for having created for the client, in a single massively-value-adding afternoon, a relationship that is easily worth a million or two. And the longer you stay on site, the more value that single afternoon turns out to have created for the client, hence the percentage.

[r0bly0ns]

Again, I don't really care as I look at the rate I am getting rather than what the client is paying overall. However, I do think it's unfair that anyone (i.e. agencies) should get long term income for not doing any work.

It's a fair point, however it is the end client who are paying the agency and not the supplier (myCo).

If the client want's to pay an agency for the next 25 years in order to keep a supplier then that is their descission and nothing to do with me.

[thunderlizard]

I wouldn't try and pick apart the margin at such an early stage: it's likely to turn the client away. Better to go in at a rate you're happy with: then later on, if you're up for renewal and you find out the agent's getting far more than he deserves, by all means try and grab yourself a slice of it.

[shoes]

It all depends on the client how much the agency cut is going to affect you. If they are a small cost conscious firm and the agency is charging you out at too high a rate your contract will not last as long and the client will expect more from you. This situation is actually detrimental to yourself AND the agency because the contract is less likely to be renewed and you are less likely to want to be renewed at a client that is on your back all the time. This thinking is unlikely to occur to the agent however and they will think they have done their job well.

Meanwhile you and the agent will make less out of the client than you would have done if you were charged out at a more reasonable rate.

If the client is a typical large firm then I would argue the agents cut makes less of a difference. I think the main thing to remember in these negotiations is that although you might know the kind of money a client is prepared to pay for someone with your skillset the other guy you might be up against might not. The agent will not pick the best candidate for the role, they will pick the one that gets them the most money in the short term.

The best solution is to go direct!

[Peter Loew]

I wouldn't try and pick apart the margin at such an early stage: it's likely to turn the client away. Better to go in at a rate you're happy with: then later on, if you're up for renewal and you find out the agent's getting far more than he deserves, by all means try and grab yourself a slice of it.

This is exactly what I intend to do. I have seen the agency's margin for me on this contract, it is £210 more than my day rate.

What I don't understand is that, is this what the client is paying to the agent on a daily basis?

[Ardesco]

This is exactly what I intend to do. I have seen the agency's margin for me on this contract, it is £210 more than my day rate.

What I don't understand is that, is this what the client is paying to the agent on a daily basis?

How do you know what the agency's margin is? this could be what they make in a day/week/month/duration of whole contract. Without any more detail it is impossible to tell.

[Peter Loew]

How do you know what the agency's margin is? this could be what they make in a day/week/month/duration of whole contract. Without any more detail it is impossible to tell.

Because the agent inadvertently left this detail in a cut and paste snippet to me from their accounts dept.

But you're correct, I don't know what the margin refers to. I am suspicious because this kind of role should be a high payer, but I am getting what I consider to be an average day rate.

[Ardesco]

Because the agent inadvertently left this detail in a cut and paste snippet to me from their accounts dept.

But you're correct, I don't know what the margin refers to. I am suspicious because this kind of role should be a high payer, but I am getting what I consider to be an average day rate.

Ask the agent to explain it then. Should be interesting listening to him squirm if nothing else