Agency Commission / Markup

[pzz76077]

Wost I came across lately was this poor scripter that his agent was charging client co 930pd and paying the kid 135pd.
Apparently he knew about the situation but the kid was happy as it was almost double the rate he was getting in his previous (permie) role.

Takes all kinds I suppose.

PZZ

[thunderlizard]

It's not a Markup!!

Yes it is.
When Comet buys a washing machine wholesale for £200 and sells it for £300, that's a markup because they're selling the same product on for extra.
When Rover buys loads of plastic, metal and rubber for £200, makes it into a car and sells it for £10,000, that's not a markup.
A recruitment agency model is closer to Comet than to Rover.

But that doesn't make it wrong.

[pzz76077]

Yes it is.
When Comet buys a washing machine wholesale for £200 and sells it for £300, that's a markup because they're selling the same product on for extra.
When Rover buys loads of plastic, metal and rubber for £200, makes it into a car and sells it for £10,000, that's not a markup.
A recruitment agency model is closer to Comet than to Rover.

But that doesn't make it wrong.

More of a commission than a markup me thinks.

PZZ

[thunderlizard]

I think a commission would have to be more explicit, and paid separately.

[pzz76077]

I think a commission would have to be more explicit, and paid separately.

Doesnt sound like my idea of a markup http://en.wikipedia.org/wiki/Markup_%28business%29

PZZ

[malvolio]

What the agent gets is the selling price. What you get is the proportion of that price you negotiated with the agent. The balance is the agent's profit on the deal. It's not a commision, nor is it a margin, it's a profit. It's what all companies exist to generate.

[pzz76077]

What the agent gets is the selling price. What you get is the proportion of that price you negotiated with the agent. The balance is the agent's profit on the deal. It's not a commision, nor is it a margin, it's a profit. It's what all companies exist to generate.

Not sure that this would be a profit either- surely a profit (if any, many agents going bust at the mo) would only be achieved after the agents costs and overheads were deducted.

PZZ

[pzz76077]

What do estate agents get when they sell your house - they normally advertise 2.5% commission on sales I believe. Most IT agents will also tell you how much commission they will charge the client on top of your wack.
Same kind of scenario??

PZZ

[MrToast]

Not sure that this would be a profit either- surely a profit (if any, many agents going bust at the mo) would only be achieved after the agents costs and overheads were deducted.

PZZ

Gross Profit and Net Profit?

[Not So Wise]

I found out today that my agency is taking 25% of my daily rate as commission. This seems excessively high and when I accepted the role I was told the client was on a tight budget and there was no margin for negotiation and so took this rate.

25% is on the high side but quite simply you and client were "out negotiated", agent told them it would cost X to get someone like you and then told you that your skills were less than X, they get to keep the difference. It's called business

Now, you are in possession of information you did not have before (how much client willing to pay) so you have 3 choices

*Do nothing
*Cry like a little girl about how unfair agency is
*Keep quite about the information and use it to your advantage