Asking about agencies margins in interviews?

[bunman]

Having been a seasoned contractor (10+ years, never had a perm job) I often wonder how others deal with agencies.
Back in the early day the horror stories where everywhere with the 50%+ markup agencies made.

Now I started asking in interviews what rate the employers wanted to pay. Sometime I would sound it first with a hint. Aren’t all agencies idiots, they sent me the wrong spec, etc, etc top see how the interviewer would respond. This lead to the interviewer telling me this story:

About how he was out for a drink after work with a contractor and he complained that he could not afford another round as he had no money. The normal you are a contractor you have loads of money from the interviewer and he said he was only one £11 an hour and this was after an extension where he got a £1 an hour more. The company paid £26 an hour for his desktop support services. He said he didn’t have the heart to tell him what the agency got……

I was much better placed with the agency for discussions then.
So sometimes I ask about what rate they pay. Sometimes I don’t if the vibe is all wrong.

So the question is do any of you ask in interview or would you consider it bad form?

I dislike the agencies cut more than most and will not take a job / walk out if the rate is too high. Some contractors don’t care and are ok as long as they get what they want.

Sometimes I ask when I am in a contract and have a good relationship with the employer and a renewal is due. Other time I find out At Mars/masterfoods we had a database of the Web Support staff with the budgeting with rates paid to the agency that everyone was on so I know they agency were just getting the margin they said.

To my surprise recently I went for an interview and the agency put my daily rate I asked for on the CV they sent the client. So I know they were not conning me. First time I have seen that. So no need to ask. I like that from an agency and I will use Coal again for that reason.

So what do you do?

[dutchrecruiter]

I am a pimp, so this is totally one sided (ish)

What difference does it make, what your pimp gets for you? At the beginning you agree a rate, when offered you finalise a rate and that is between you and your agent.

Before I was a pimp I was a hiring manager, and would never hire a contractor who talked money. 2 reasons for this firstly when extensions come around you would inevitably ask for more money and secondly if you are talking money with me now, what you going to be like on the floor with other contractors and perms knowing what you are earning because you are happy to bump your gums about it.

Indeed there was a time when 30-50% was standard, and sometimes even worse, but I think that most agencies now, if they have any standing with their clients are all on fixed agreements.

Some are as little as 6%, but I would say the contracting norm is about 15-20% margin per hour/day.

For this, an agent has to pay its staff (Sales, Admin, IT) rent an office, pay bills/advertising/etc., keep databases and IT system, etc. etc. etc but more importantly your pimps company normally take a huge risk away from you, both legally and financially. Most (and I have heard of the pay you when we get paid gang) pay your invoices up front within a strict payment schedule and then have to wait 14/30/60/90 days until they see a dime back (And with the larger companies with a huge credit check, default on those)

Basically I know, through recruitment and hiring experience you are doing yourself no favours.

[Zorba]

I do try and find out the agency cut during the first leg of a contract, just so that I am better informed when it comes to renewal, but I would be very wary about doing it in an interview. I do agree with dutchpimp that if you agree on a rate with the agent then it should mean something.

That doesn't, of course, exclude such classics as the guy who went for a contract on an agreed rate, got the gig, then during the first week the customer made off-hand remarks about this contractor having been a bit cheeky asking for an increased rate. Turns out the pimp had sussed that the client was totally set on this guy and so he pushed his margin up, saying that it was the contractor who wanted a higher rate.

And it doesn't stop it being a bit irritating when you go into a job and find someone else is on £x more or less than you for the same job (or even a lesser one).

But to return to the original question, not sure I'd want to go there in an interview.

[Ardesco]

Not something I would do in an interview, and to be honest the cut the agent takes doesn't really matter as long as I am earning a decent rate and the end client isn't expecting more than I give.

It can be useful to know the agents cut at renewal time, but most agents won't reduce thier cut anyway, they will just go and ask the client for more saying that you want more cash.

My advice would be forget about the agents cut, it will just wind you up and cause stress you don't need. Also never discuss your rate with anybody else, you may be the best paid person there and mouthing off about your rate will just cause discontent amoung the other contractors, and envy from the permies who don't realise that your rate is higher because of the extra risks and expeses you incur.

[richard-af]

The Pimp's cut is irrelevant - as long as you get your agreed rate. Literally none of you business. You'll be seen as an oddity if you go around sniffing for that sort of info.

[chicane]

In extreme cases where the margin is extremely high, it does become significant. Picture a situation where the contractor is on £15/hour (an acceptable rate to them) and the client is paying £40/hour. The agent is unwilling to disclose the extent of their margin to either client or contractor.

In this situation, it's not unreasonable for the client to imagine that the contractor is on £30/hour for their work as opposed to the £15 they are actually getting. In this case, the client will be expecting the knowledge and experience of a £30/hour contractor rather than a £15/hour contractor - the expectations of the client lie far beyond the ability/experience of the contractor.

The net result is that the client becomes frustrated that they're paying £40/hour for somebody who clearly isn't up to the job, and everything falls apart after the 3 months is up. By which time the short-term minded agent has taken off with the money anyway.

[Ardesco]

Not something I would do in an interview, and to be honest the cut the agent takes doesn't really matter as long as I am earning a decent rate and the end client isn't expecting more than I give.

In the case you make it can be a problem, but (and a big but) if you don't have the skills/abilit/experiance required you aren't going to get renewed anyway, and knowing what the agents cut is will not change a thing.

In this case i would say be glad to get paid for 3 months while being thrown in at the deep end, you will probably come out with some useful skills.

[Lewis]

I ask agents to confirm their margin in an email before I sign anything. I also now only work through large well known agencies.

In 10 years of contracting I have been stung a few times by very dodgy agents doing very dodgy things (usually the smaller agencies) so I no longer take any chances.

I also ignore all the cr&p about why does the margin matter. I think its the most stupid argument I have ever heard. I am happy for an agency to take a reasonable cut but not an unreasonable one. I have a family to look after and quite frankly my primary concern is them not the bank account of a dodgy agency who are ripping people off.

[chicane]

I also now only work through large well known agencies.

But S3 own a good portion of the large agencies.

[Ardesco]

I also ignore all the cr&p about why does the margin matter. I think its the most stupid argument I have ever heard. I am happy for an agency to take a reasonable cut but not an unreasonable one. I have a family to look after and quite frankly my primary concern is them not the bank account of a dodgy agency who are ripping people off.

At no point am I saying reduce your expectations of renumeration!! If you expect to earn £300/day for your experiance and skillset, and you are offered £300/day for a gig utilising it what does it matter what the agent is taking?

If you are happy with the rate, it pays the bills and gives you enough to look after your family does it really matter if the agent is getting £1 or £1000 out of it? To refuse to take the gig because you don't know what percentage the agent is getting is called cutting off your nose despite your face.

I really don't understand why people get so uptight about agents commision. As scummy and annoying as agents are, they do provide us with a means to get gigs and they are a business. If you were in the same position you would be maximising your income as well.

A common misconception is that the agency is taking your money, and that if you went direct you would get hundreds of pounds more per day. The sad truth is that the contract between the agent and the end client is nothing to do with you, and it is not your money. Also in 90% of cases the end client will expect to pay you less than they pay an agent if they take you on direct because they expect to make a saving, and they have to do all the running around the agency would normally do which takes time and costs money.

Don't get me wrong I will bitch and moan about agents as much as the next man, but I still have to admit that they provide a service that I need, and you have to expect them to do thier best to make money out of it.